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Alma Mater Studiorum – Università di Bologna DOTTORATO DI RICERCA IN Diritto Europeo Ciclo XXIX Settore Concorsuale di afferenza: _12 / E4_ Settore Scientifico disciplinare:_IUS / 14_ TITOLO TESI The Role of the European Union and other International Organisations in Promoting Corporate Social Responsibility Presentata da: ALBERTO JIMÉNEZ-PIERNAS GARCÍA Coordinatrice Dottorato Relatore Prof.ssa Lucia Serena Rossi Prof. Marco Balboni Esame finale anno _2016_

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Page 1: JIMENEZ-PIERNAS ALBERTO TESI · Milan Kundera: The Unbearable Lightness of Being , New York 1991, Harper-Perennial, p. 105. vii Acknowledgements: We wish to warmly thank Prof. Marco

AAllmmaa MMaatteerr SSttuuddiioorruumm –– UUnniivveerrssiittàà ddii BBoollooggnnaa

DOTTORATO DI RICERCA IN

Diritto Europeo

Ciclo XXIX

Settore Concorsuale di afferenza: _12 / E4_ Settore Scientifico disciplinare: _IUS / 14_

TITOLO TESI

The Role of the European Union and other International Organisations in Promoting Corporate

Social Responsibility

Presentata da: ALBERTO JIMÉNEZ-PIERNAS GARCÍA Coordinatrice Dottorato Relatore Prof.ssa Lucia Serena Rossi Prof. Marco Balboni

Esame finale anno _2016_

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i

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To my mother,

in memoriam

To my father, my brother

and friends

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CONTENTS

Introduction 01

Chapter I: Corporate Social Responsibility at a global level 14

1.1. Globalisation and Human Rights 14

1.2. The particular problematic of economic, social and cultural rights 24

1.2.1 Context and legal evolution 24

1.2.2 Levels of States’ obligations 29

1.3. The United Nations: shaping CSR 36

1.3.1 CSR and the United Nations: a new momentum 40

1.3.2 The controversial definition of CSR 51

Chapter II: The role of international organisations: open windows 72

2.1. Bringing orderliness in the work of international organisations 72

2.1.1. Common aspects and institutional coordination of

international standards 72

2.1.2. The challenge of substantive coordination 78

2.2. CSR and international trade and investments 83

2.2.1. International investments and human rights 85

2.2.2. Screening the WTO: open windows 109

2.3. Soft law and the potential of international organisations 128

2.3.1. Soft law and corporate human rights respect 128

2.3.2. The role of international organisations 135

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Chapter III: Corporate Social Responsibility in the European Union 140

3.1. The emergence of CSR in the EU 140

3.1.1. From a limited concern ad intra to a wider

development goal 140

3.1.2. A new impulse after 2009 153

3.2. CSR: mainstreaming EU policies 156

3.2.1. Implementation of the CSR agenda: information

and promotion 158

3.2.2. Implementation of the CSR agenda: institutional and

international aspects 164

3.2.3. Implementation of the CSR agenda: impact on EU Law 174

3.3. National initiatives in the EU 182

3.3.1. Member States’ role: challenges and opportunities 182

3.3.2. National guidelines and main initiatives 195

Chapter IV: The potential of the EU’s contribution to global CSR 203

4.1. The potential of soft law in the EU 203

4.1.1. The initial guidance of the ECJ: introducing the debate 203

4.1.2. Consolidation and taxonomy of soft law in the EU 208

4.1.3. Assessment. CSR and soft law 214

4.2. Access to justice: an open question 222

4.2.1. Premises on corporate extraterritorial responsibilities 222

4.2.2. Current developments in the EU 240

4.3. The role of the EU and the post-2015 agenda 250

4.3.1. The role of the EU: some institutional remarks 251

4.3.2. Substantive contributions and the post-2015 agenda 267

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Conclusions 273

Cited Bibliography 284

International Jurisprudence 308

National Jurisprudence 313

States’ Practice: Legislation 315

States’ Practice: Policies 316

Practice of International Organisations 317

Practice of the European Union 324

List of Treaties 329

Websites 330

Index of Tables and Diagrams 332

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“When a society is rich, its people don't need to work with their hands; they can devote themselves to activities of the spirit. We have more and more universities and more and more students. If students are going to earn degrees, they've got to come up with dissertation topics. And since dissertations can be written about everything under the sun, the number of topics is infinite. Sheets of paper covered with words pile up in archives sadder than cemeteries, because no one ever visits them, not even on All Souls' Day. Culture is perishing in overproduction, in an avalanche of words, in the madness of quantity. That's why one banned book in your former country means infinitely more than the billions of words spewed out by our universities.”

Milan Kundera: The Unbearable Lightness of Being, New York

1991, Harper-Perennial, p. 105.

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Acknowledgements:

We wish to warmly thank Prof. Marco Balboni for his academic orientation, together with Prof. Lucia Serena Rossi, Director of the PhD Program in European Union Law of the University of Bologna (Italy), both of them being vital instigators and inspirators of this work. This research would not have been possible without the scholarship of the Royal College of Spain in Bologna; we particularly thank the Illustrious Members of the Patronage, H.E. Rector García Valdecasas and fellow Scholars and colleagues. We would like to further express our gratitude, for different reasons, to Prof. Pascual Vives (University of Alcalá, Madrid), Prof. Zamora Cabot (University of Castellón, Spain), Prof. Calvo Caravaca (University Carlos III, Madrid), Prof. Villán Durán (former UN officer), Prof. Domínguez Redondo (Middlesex University London), Mrs. Carmen Rosa Rueda Castañón (UN), Ms. Mara Bustelo (UN), Mr. Rio Hada (UN), Ms. Juana Sotomayor (UN), Ms. Orlagh McCann (UN), Ms. Rebaone Ferguson (UN), Mr. Josep Bosch (WTO), Dr. Andrés Rigo Sureda (IMF), and H.E. Mr. Amadeo Pérez Yáñez (Swiss Ambassador to the UN and Other International Organisations in Geneva).

All errors and omissions, however, remain the author’s sole responsibility.

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Note on Citations

Bibliographical references are made following the Continental

European style, including Latin abbreviations such as Idem (the

same), Ibíd. (the same place –if necessary indicating different

pages), op. cit. (the work cited). For the reader’s comfort footnotes

include the full bibliographical information (city, year and

publisher).

As for official documents of International Organisations,

jurisprudence, and legislation, the full reference is used when first

cited. Subsequent citations use only the official reference number

of the organisation at stake and the pages or paragraphs.

Websites were checked on 15 January 2016.

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Abbreviations

AB Appellate Body (WTO)

ACPs African, Caribbean and Pacific Group of States.

Art. Article

ATS/ATCA Alien Tort Statute / Alien Tort Claims Act

AU African Union

BIT Bilateral Investment Treaty

CCPs Central Counterparties (referred to central banks)

CELAC Community of Latin American and Caribbean Countries

CFSP Common Foreign and Security Policy (EU)

COHOM Council Working Group on Human Rights (EU)

CPR Civil and political rights

CSO Civil Society Organisation

CSR Corporate Social Responsibility

Dir. Directive

DJSI Dow Jones Sustainability Index

DSB Dispute Settlement Body (WTO)

DSU Dispute Settlement Understanding (WTO)

ECB European Central Bank

ECHR European Convention on Human Rights

ECtHR European Court of Human Rights

ECJ European Court of Justice (alternatively, CJEU, Court of Justice

of the European Union)

EIB European Investment Bank

EMAS Eco-Management and Audit Scheme

EMSF European Multi-Stakeholder Forum

EP European Parliament

ESCR Economic, social and cultural rights

EU European Union

FAO Food and Agriculture Organisation of the United Nations

FDI Foreign Direct Investment

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GATS General Agreement on Trade in Services (WTO)

GATT General Agreement on Tariffs and Trade (WTO)

GRI Global Reporting Initiative

H.E. His Excellency

HRC Human Rights Council (UN)

IBRD International Bank for Reconstruction and Development (WB)

ICC International Criminal Court

ICCPR International Covenant on Civil and Political Rights

ICESCR International Covenant on Economic, Social and Cultural Rights

ICSID International Centre for Settlement of Investment Disputes

IDA International Development Association (WB)

IFC International Finance Corporation (WB)

IFI International Financial Institutions

IHRL International Human Rights Law

IIA International Investment Agreement

IL International Law

ILC International Law Commission

ILO International Labour Organisation

IMF International Monetary Fund

IOs International Organisations

ISO International Organisation for Standardisation

MDGs Millennium Development Goals

MFN Most Favoured Nation (WTO)

MIGA Multilateral Investment Guarantee Agency (WB)

MNEs Multinational Enterprises

MoU Memorandum of Understanding

NAFTA North American Free Trade Agreement

NAP/s National Action Plan/s

NCP/s National Contact Point/s (OECD)

NGO Non-governmental Organisation

NHRI National Human Rights Institution

NRA National Regulatory Authority

OECD Organisation of Economic Co-operation and Development

OHCHR Office of the High Commissioner for Human Rights (UN)

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OMC Open Method of Coordination (EU)

PPPs Public Private Partnerships

QB Queen’s Bench Division (British judicial system)

R&D Research and Development

Reg. Regulation

Res. Resolution

SDGs 2030 United Nations Sustainable Development Goals

SMEs Small and Medium Enterprises

SPS Agreement Agreement on the Application of Sanitary and Phitosanitary

Measures (WTO)

SRI Socially Responsible Investment

TEU Treaty of the European Union

TFEU Treaty of Functioning of the European Union

TNCs Transnational Corporations

TRIPs Agreement Trade-Related Aspects of Intellectual Property Rights Agreement

(WTO)

UDHR Universal Declaration of Human Rights

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UNCTAD United Nations Conference on Trade and Development

UNESCO United Nations Educational, Scientific and Cultural Organisation

UNGPs United Nations Guiding Principles on Business and Human

Rights

UNIDROIT International Institute for the Unification of Private Law

UNPRI ‘United Nations’ Principles for Responsible Investment

WB World Bank

WG Working Group

WHO World Health Organisation

WIPO World Intellectual Property Organisation

WTO World Trade Organisation

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INTRODUCTION

Subject of research

The international scenario has suffered many substantive changes in the last twenty-five

years. Almost a generation is born since the end of the Cold War. More precisely, the

implosion of the Soviet Union in August 1991 has drastically changed our legal,

political and economic priorities and aspirations1. Despite the relative level of

integration of the so-called international society, essentially promoted by

intergovernmental international organisations, we might admit that this integration is

still initial and partial, with the meaningful exception of the European Union (EU). At

the same time, we witness the multiplication of actors of all kinds in the international

arena, and their increasing influence due to globalisation: churches, lobbies and all kind

of companies with their diverse interests. Globalisation extends beyond the economy

and affects labour relations (global competition between workers, their international

mobility and delocalisation), communications (the expansion of the World Wide Web

and the Internet), health global crisis (due to Ebola, AIDS/HIV, H5N5 virus, to cite only

a few recent diseases), and security problems (all forms of transnational terrorism),

creating a variety of “borderless threats”2. We face a wider range of actors which,

sometimes, seem to relegate States, who historically were self-sufficient and superiorem

non recognoscens in the classic terminology, while the former dominance of “high-

politics” and the bipolar geopolitical configuration have lost prominence.

On the other hand, in legal terms and according to that traditional viewpoint, only States

and International Organisations can be considered subjects of International Law (IL)

without any doubt; however, nowadays’ world places us in an interesting crossroad: the

presence and strength of some actors, like transnational companies (TNCs), has eroded

the pre-eminence of States and Organizations on the international stage.

Simultaneously, the international agenda has also significantly changed, with the rise of

new concerns: mainly, human rights, sustainable development and the environment, in 1 It has been a far-reaching change in mentalities, on which an indispensable, in-depth and visionary analysis is the one made by the Spanish master teacher of international law, Prof. Truyol y Serra, who died in 2003. A. TRUYOL SERRA: La Sociedad Internacional, Madrid 1993, Alianza Ed., pp. 128-171. 2 A very recent state of the art: S. HAMEIRI and L. JONES: Governing Borderless Threats: Non-Traditional Security and the Politics of State Transformation, Cambridge 2015, Cambridge University Press.

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an increasingly multilateral world. Social concerns have necessarily become

international: development and human rights have emerged as strong items on the

international agenda, solidly intertwined, repeatedly calling upon private actors’

complementary role in their advancement, as confirmed by the new UN Sustainable

Development Goals for 2030 (SDGs), adopted in September 20153.

The development of international human rights law (IHRL) is, without any doubt, one

of the very few good things left by the 20th Century. Economic globalisation and the

increasing interdependency and integration of the international system give rise to a

double challenge: to make globalisation and human rights reconcilable, with a view to

minimising the adverse effects of the intense transnational economic and financial

flows. This challenge expresses itself through a particular, and usually controversial,

interaction between human rights’ enjoyment and the daily activities or operations of

transnational companies (TNCs). It is in this context that Corporate Social

Responsibility (CSR) and related notions have been born: its aim is to solve this

problem through a complex set of ‘soft law’ and ‘hard law’ instruments, which are

inspired on other classic normative components of IL and IHRL.

In this context, the concrete subject of study of this research is an analysis of the

contribution made by international organisations in promoting CSR and how their role

has changed. This consists of providing an answer to the following problematics, inter

alia: what organisations have led the way in shaping CSR; how CSR has evolved and

what are its characteristics and definition; why the role of international organisations is

crucial; what has been the EU’s role, how is it different from other IOs (both

institutionally and substantively); and if purely economic organisations got something

to say (the World Bank Group, the World Trade Organisation). In sum, what are the

open possibilities for the promotion of human rights in relation to the activities of TNCs

from an institutional perspective? We also question how CSR can be integrated within

the general regime of international protection of human rights, which ultimately leads us

to wonder if victims of corporate-related human rights’ breaches have access to justice

and under what circumstances. 3 The new SDGs, at the end of the day, “seek to realize the human rights of all”. In this development agenda, it is acknowledged that the “[p] rivate business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creations” so that the UN “call[s] upon all businesses to apply their creativity and innovation to solving sustainable development challenges”. UN (General Assembly): Resolution “Transforming our World: the 2030 Agenda for Sustainable Development”, 25 September 2015, UN Doc. A/RES/70/1, preamble and para. 67 (citations).

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Even at the risk of being a little descriptive at times, there is a lateral and instrumental

objective, but not less important: to bring order to the ever-growing documentation and

initiatives (issued by a plethora of intergovernmental and non-governmental

international organisations), so as to show, with all due caution, their relative coherence,

direction and potential. The need to bring some order is even more important in the EU,

were we face dispersed and many times apparently disconnected initiatives that start to

go beyond mere voluntariness, so usually associated to CSR. To ‘bring order’ does not

consist of repeating and summarising one more time the existing CSR standards4; it is

rather a research of common points and threads to infer eventual patterns and directions.

Of course, this study corresponds to the larger category of what could be called

“business and human rights studies”, while having a more limited scope.

At the root of our subject-matter, thus outlined, we come across three theoretical

problems that will subsequently determine our methodological approach. First of all, we

face the above-mentioned interrelation between traditional subjects of International Law

and the whole range of transnational “actors”. There is nothing to add for the moment

apart from recalling that its origin lies in globalisation and that it is not an insuperable

challenge for IL –we address it in detail in the first chapter so we avoid developing it

here.

Secondly, the sectorialisation of IL does not help us either, since it sometimes seems

that commercial or investment matters are separate from the rest of IL regimes. These

regimes have an apparently autonomous development, even with their own tribunals,

and tend to self-sufficiency, ultimately implying a risk of fragmentation. Businesses

would operate in a field while human rights would correspond to a different and

detached universe. The International Law Commission has explained that, unlike

internal orders, International Law has not clear-cut normative hierarchies but “this has

never meant that one could not, in particular cases, decide on an order of precedence

4 This work has been done by many commentators. We recommend the following states of the art and a very recent dictionary: S.M. IDOWU, N. CAPALDI, M. FIFKA, L. ZU, R. SCHMIDPETER (Eds): Dictionary of Corporate Social Responsibility. CSR, Sustainability, Ethics and Governance, Swtizerland 2015, Springer Ed; D. TÜRKER, H. TOKER and C. ALTUNTAS (Eds.): Contemporary issues in Corporate Social Responsibility, Plymouth (UK) – New York (USA) 2014, Lexington Books; B. HORRIGAN: Corporate Social Responsibility in the 21st Century. Debates, Models and Practices Across Government, Law and Business, United Kingdom 2010, Edward Elgar Publishing Ltd –the latter covers only until 2009 but is useful for some initial comments and to study the first initiatives.

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among conflicting rules”5, which “cannot be determined abstractly” and needs a case-

based and “pragmatic” stance6.

The third problem is ‘ideologisation’: ideological needs or ‘blinkers’ only push us to

disillusionment and undermines the scientific value of any study. Many human rights

activists expressed their shock in delusional and grandiloquent discourses, for example,

when the Grand Chamber of the European Court of Human Rights (ECHR) finally

approved the presence of crucifixes at public schools in Italy, to the disappointment of

many. The Court very rightly explained that, for the time being, there was “no European

consensus” 7 in this regard so it could fall under the margin of appreciation of member-

States. Activists were presumably delighted, however, when the UN Committee on

Civil and Political Rights (CCPR) impeded a French claimant, Mr Wackenheim, who

suffers from dwarfism, to freely work in circus numbers including “dwarf tossing”

(wearing a suitable protective gear), because the local authorities had banned it alleging

a breach of human dignity, to the detriment of the primary livelihood of Mr.

Wackenheim. He exhausted the French domestic remedies and unsuccessfully claimed

to the UN-CCPR8 that this ban had deprived him of his right to work and that he had

freely decided to have that work and didn’t feel his dignity violated –if we are allowed

to add it, our televisions continuously show spectacles in which to ridicule (consenting)

people is common place and human dignity and non-discrimination are more than

discussable. Of course, we only propose these examples in a thought-provoking manner,

to warn against ‘ideologisation’. Moving from anecdotes to categories, activists and a

good part of the public opinion incur in a twofold misunderstanding that leads to

delusion: they defend ideological expectations over legal limitations and they expect

international tribunals to act as constitutional courts to overcome that problem9. This is

5 INTERNATIONAL LAW COMMISSION (ILC): Fragmentation of International Law: Difficulties Arising From the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission, 13 April 2006, UN Doc. A/CN.4/L.682, para. 325 (at pp. 166-167). 6 “This reflected the pragmatic sense that some criteria are, in particular contexts, more important than others”. Ibíd. 7 “The Court concludes in the present case that the decision whether crucifixes should be present in State-school classrooms is, in principle, a matter falling within the margin of appreciation of the respondent State. Moreover, the fact that there is no European consensus on the question of the presence of religious symbols in State schools speaks in favour of that approach”. ECtHR (Grand Chamber): Lautsi and Other vs. Italy, Judgement of 18 March 2011, Application No. 30814/06, para. 70. 8 UN-CCPR: Manuel Wackenheim vs. France, Decision of 15 July 2002, Communication No. 854/1999, UN Doc. CCPR/C/75/D/854/1999 (2002). 9 In this connection, Prof. Pascual Vives concludes that the above-cited case of Lautsi should not disappoint international lawyers: “en el caso Lautsi y otros c. Italia, analizada desde el DI Público, no debe concebirse con desazón, como una laguna en la jurisprudencia del TEDH […] Todo lo contrario,

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why we have shunned ideological requirements and any kind of activism (corporate

neo-liberalism just as much as pro-human rights purism). In relation to ideological

stances, we shall add political interferences, on which it must be highlighted that –when

dealing with human rights– we always need a certain amount of political will, without

which we cannot make them work. But a purist and doctrinal study of human rights can

compromise their practical effectiveness and unduly neglect open opportunities for the

introduction of human rights’ concerns within business activities, as it will be shown.

Methodology

The methodology adopted stems from the observation of the above-mentioned problems

(international subjectivity, risk of fragmentation of IL and widespread ideologisation).

This has forced us to adopt a consensual approach to offset the problematic

ideologization and to explain the foundation and development of International Law,

since CSR is an area under development. We have further adopted an integrative stance

to overcome undesirable risks of fragmentation of IL, which is the pathology of the

unavoidable sectorialisation of IL. And a human rights-based approach is finally

needed to clarify and correctly focus CSR.

Our consensual approach is guided by pragmatism, in the already-cited words of the

ILC, when dealing with the risks of fragmentation of IL, so we give a great importance

to the gradual construction of agreements in an area, like CSR, that is clearly in its

infancy. Even though it shows promising developments, methodologically speaking, we

will keep in mind public international law principles and, in particular, how difficult but

necessary it is to reach a certain level of consensus within the international society (also

within the EU)10. Of course, the path of consensus is not necessarily easy and we do not

idealise it. It is advisable to keep being realistic and critic. Power and economic

differences between States are obvious in the world, and between States and

constituye un resultado ajustado a la naturaleza internacional del Tribunal de Estrasburgo y coherente con el papel que desarrolla la noción de consenso, entendida desde una perspectiva material, en ordenamiento jurídico internacional”. (Emphasis added). F. PASCUAL VIVES: “El margen de apreciación nacional en los tribunales regionales de derechos humanos: una aproximación consensualista”, in Anuario Español de Derecho Internacional, Vol. 29 (2013), pp. 217-262, at p. 257. 10 See, generally: J. FERRER LLORET: El consenso en el proceso de formación institucional de normas en el Derecho internacional, Barcelona 2006, Atelier Ed., passim.

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Companies, even within the European Union11. IHRL tries to prevent actions, which

could, not so long ago, be acceptable. The nineteenth century industrialisation would

now be disapproved from a human rights point of view, that is, international standards

change and evolve. For example, the abolition of slavery is, from a historical

perspective, to some extent a recent development –no need to recall the difficulties

experienced before an international consensus was reached in this regard –the US

needed a civil war. So, it will take some time to consolidate the current initiatives given

the huge and non-easily reconcilable interests at stake12. Here lies the fundamental role

of consensus in the formation of IL13.

To work towards reaching a favourable climate of opinion is an indispensable step in

the progressive development of IL. This process will determine the future of CSR: the

customary path, based on the construction of that consensus, means that all States do

not need to absolutely and unanimously agree on every single point, but still is there a

common sense of agreement to the extent States do not wish either to hinder the

development of CSR just by forcing excessively detailed negotiations, which would be

inescapable when unanimity is required or a vote is asked14.

Still on methodology, we adopt an integrative position for two reasons. First of all, our

integrative perspective is aimed at resituating CSR within the framework of IHRL,

which is its natural field according to our research. At the same time, an integrative 11 To give a recent example, Swedish Social Democrats had promoted –when in opposition– a parliamentarian initiative to recognise Western Sahara independence. Morocco then blocked the opening of the first IKEA store (in Casablanca) scheduled for October 2015. Once in office, Social Democrats have finally changed their mind abandoning their initiative, as reported by the press. See: A. TAYLOR: Ikea may have stumbled into one of North Africa’s most intractable land disputes”, in Washington Post, 29 September 2015, available at https://www.washingtonpost.com/news/worldviews/wp/2015/09/29/ikea-may-have-stumbled-into-one-of-north-africas-most-intractable-land-disputes/ (last accessed date: 24 October 2015). Also refer to the recent decision adopted by Sweden at the Spanish journal El País as reported by Reuters: “Suecia renuncia a reconocer al Sáhara tras el bloqueo marroquí a Ikea”, El País, 18 January 2016, available at: http://internacional.elpais.com/internacional/2016/01/18/actualidad/1453119823_900989.html -last accessed date 19 January 2016). 12 As it is eloquently said in a theatrical work by Jacinto Benavente (1866-1954), a Spanish writer very critical of the bourgeoisie –his own social class: “we’ve created many bonds of interest, and it’s in everyone interest to rescue us”. To put it crudely, it can be said that it is in the interest of capitalism to find out how business and human rights can be compatible and to develop an international agreement in that direction. A bilingual (English-Spanish) edition of this theatrical work: J. BENAVENTE: The Bonds of Interest – Los intereses creados (Edited and translated by Stanley Appelbaum), New York 2004, Dover Publications, p. 75 (quote). 13 C. JIMENEZ PIERNAS : “El derecho internacional contemporáneo: una aproximación consensualista”, XXXVII Curso de Derecho Internacional, Washington 2011, Organización de Estados Americanos, 64 pp., at pp. 27-31. 14 A. CASSESE: “Consensus and some of its pitfalls”, in Rivista Italiana di Diritto Internazionale, No. 58 (1975), pp. 754-761, at p. 755.

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stance is needed to recall that international economic law, IHRL, and any other sector,

all are within general international law and do not function in a vacuum. Just as we

resituate CSR within human rights law, we resituate international economic law within

general international law.

This integrative perspective therefore insists on the risks of fragmentation of IL, on

which we now shall add a few words. For instance, we have already stated, against

fragmentation, that there are not watertight law-fields excluding each other.

Sectorialisation is the necessary result of the specialisation of diverse legal fields due to

the complexity of international activities, in line with globalisation trends, being also a

result of regionalisation15. Fragmentation is the undesirable consequence of

sectorialisation. According to the ILC, it is difficult and problematic to establish an

aprioristic and abstract hierarchy within IL, but as said before, this does not mean it is a

totum revolutum. Nor does it mean that there are absolutely self-contained regimes. IL

has a “relational character”: “[i] f lawyers feel unable to deal with this complexity, this

is not a reflection of problems in their ‘tool-box’ but in their imagination about how to

use it”16. More concretely, the fact of being a lex specialis is not a passe-partout to

disregard other specific regimes (human rights) or general international law, provided

the specific case requires it and that it is done accordingly with the general principles of

IL (for example, in good faith). Imagination is needed besides reasonable and

technically-feasible goals, therefore rejecting maximalist stances and wishful thinking

that, in fact, reflect ideological exigencies.

Of course there are superior interests of the ‘international society’, sometimes

recognised through treaties and, in general, as a decanting process based on an

international consensus that has to be the result of combining a extensive and consistent

praxis with an opinio iuris –which in turn can be global or only regional. However, it

seems to us too optimistic to say that all human rights have reached the status of erga

omnes obligations; perhaps a limited range of its core elements have (like slavery or,

less probably, torture), but insufficient to address the problematic interaction between

15 S. SALINAS ALCEGA and C. TIRADO ROBLES: Adaptabilidad y fragmentación del derecho internacional: la crisis de la sectorialización, Zaragoza 1999, Real Instituto Elcano Ed., pp. 215-228. 16 ILC: Fragmentation of International Law…, op. cit., UN Doc. A/CN.4/L.682, para. 222 (at pp. 114-115).

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business and human rights, which is much wider in its casuistry17. Again, pragmatism is

advisable to overcome the fact that “idealist hopes are as exaggerated as the fears of

realists”18.

We therefore stick to the relational character of international norms and to the

widespread idea that fragmentation and strict ‘self-contained regimes’ are not in line

with IL principles19. This explains the reasoning in two steps that gives substance to

many of our conclusions when studying the dialectic between business and human

rights: we first investigate what role might general international law play and, at a

second stage, what role human rights can reasonably play. This is particularly important

in the area of international trade and investments.

Leaving aside our consensual and integrative methodological approach, in more general

terms, we must be aware of the gap between norms and reality, which is not only an IL

problem since it happens at an internal level as well. In this sense, a mere formal

analysis of the existing norms, with their different value, would constitute a deductive

exercise of idealism, which seems to be out of touch with the material dimensions of a

frequently problematic reality. A formal vision tends to forget the interests at stake, both

social and political, which have also an influence on the gradual creation of any

normative framework (like CSR).

This is why, in summary, we also propose an interdisciplinary approach, a method able

to cover, as Weber says, what it “ought to be” and “what it is”, to the degree legal

processes are also socio-historical phenomena20. This research has an underlying

Weberian foundation; even in what Weber himself was reluctant to explicitly accept

17 For some authors, it is not unreasonable to place human rights obligations somewhere hierarchically superior in the international legal order. In our view, this rather reflects wishful thinking than a reality rebus sic stantibus. See, generally: E. De WET and J. VIDMAR (Eds.): Hierarchy in International Law: the Place of Human Rights, Oxford 2012, Oxford University Press. 18 C.J. TAMS: Enforcing Obligations Erga Omnes in International Law, Cambridge 2007, Cambridge University Press, p. 309. 19 For a good state of the art and the basic bibliography therein, see: M.A. YOUNG: Regime Interaction in International Law. Facing Fragmentation, Cambridge 2012, Cambridge University Press. 20 An example of this idea is provided by Prof. Skouteris, from the American University in Cairo: “In trying to assess legal relationships the jurist cannot avoid the methodological conundrums of contemporary history. The fact that the object of study is ‘law’ does not mean that legal technique alone can provide an answer. […] Knowledge of state intent is intertwined with various other parameters, such as security and power, that cannot be dissected from the question of intent”. T. SKOUTERIS: “Engaging History in International Law”, in J.M. BENEYTO, D. KENNEDY (Eds.) and J. CORTI VARELA, J. HASKELL (Assistant Eds.): New Approaches to International Law. The European and the American Experiences, The Hague 2012, Springer Ed., pp. 99-121, at pp. 114-115.

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such as the relationship between politics and science, which we tangentially address

when dealing with technical requirements and the ‘expertisation’ of policies (in areas

like new technologies, food security, pharmaceutical regulation, etc.). According to the

sensible comments of Raymond Aron, the more Max Weber insisted on the

incompatibility between politics and science, the more he made clear his awareness of

the tight links between both areas21. The same thing happens in the link between law

and politics, given the strength of the concept of legitimacy in this thinker. We fully

share the idea that legitimations, whatever they may be, are the glue that makes States

work and self-sustain in time, based on a legal power characterised by its ordinary and

impersonal character22.

The interdisciplinarity of this research forces us to make various references to

transversal problems like development or governance (weak regimes, poverty, etc.),

together with occasional incursions into other fields of knowledge (from the philosophy

of language to company law or criminal and civil law23). This interdisciplinary

perspective arises from the belief that there is a need to connect and relate problems

rather than isolate questions, in order to link ideas and include social as well as political,

legal and economic aspects when facing a problem. This reveals to be indispensable as

far as the most striking global troubles are a result of an increasingly complex mixture

of factors and causes.

The international system is more and more complex and ‘complete’ in its daily

attributes and manifestations; the international system itself is in search of legitimations

to sustain the power relations upon which it is built. In this vein, if future developments

confirm that –as it seems so far– the legal formation of CSR is based on an ever-

growing consensus, this fact will provide it with a source of legitimacy in the future

accordingly to a sociological approach to IL. As Norberto Bobbio remarked in his

comments on Weber, a “pattern of legality” is not “self-sufficient” and needs an

21 “Repitió continuamente que las virtudes del político son incompatibles con las del hombre de ciencia; pero su preocupación por separar ambas actividades no era más aguda que su conciencia del vínculo que entre ellas existe”. Introduction of Raymond Aron to the Spanish edition of M. WEBER: El político y el científico, Madrid 1967, Alianza Ed., p. 10. 22 This construction led to the famous definition of the “legitimate monopoly over the use of violence within a recognized and bounded territory”. M. WEBER: Economy and Society, Vol. 2 (Edited by Guenther Roth and Claus Wittich), Berkeley 1978, University of California Press, pp. 904-905. 23 In those cases we usually make reference to a problematic that opens the door to a different law-field, but we refrain from adopting a stance or providing any answer. Nevertheless, we have considered it interesting to leave some open questions in neighbouring law-fields.

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“ulterior criterion”, for example, consensus, which is a potent source of legitimacy

(among other possibilities)24.

Norms sometimes derive from international practice, following an empirical and

inductive path according to the sociological grounds of law; but in other occasions, it is

also possible that some established practices are the product of and obey some previous

normative ideals, in a deductive way. All in all, the vertical axis operates in both

directions in the international order, combining empirical-inductive and logical-

deductive processes25. This applies to CSR: in certain occasions, it will respond to pre-

existing ideal requirements and, most of the time, it will be a reaction to the continued

experience in the field and ‘societal expectations’. Law is frequently one step behind

social developments and we are therefore closer to a sociological formation of

International Law. This research is peppered with cases involving TNCs and human

rights violations, whose objective is precisely to keep in touch with reality, the material

dimension of law, which alternatively challenges or confirms norms.

There are always logical imperfections in any legal order we examine; also internal

legal orders are far from perfect in terms of compliance and enforcement. Imperfections

are everywhere and the international society does not escape criticism (or even attracts

it more than States). Internationally speaking, we live in a societas full of contrasting

interests, perhaps with some traits of a very imperfect communitas. It is first of all for

practical reasons that we use the term “international society”, which is in our view the

most appropriate description of the current status of world politics26. In the view of

Vitoria (1483-1546) a community should have a vocation to perfection and be

teleological and morally based, but as pointed out in the following century by Suárez

(1548-1617), this is –in modern words– similar to a mathematical function or curve that

tends toward a point without never fully reaching it; not even States themselves really

achieve a perfect level of integration based on the common good27. Without entering

24 “Weber muestra claramente que no considera autosuficiente la pauta de la legalidad y, por tanto, estima necesario recurrir a un criterio ulterior, el cual puede ser el acuerdo entre intereses (el criterio del consenso […] ”, N. BOBBIO: Teoría general de la política, Madrid 2003, Ed. Trotta (Edition by Michelangelo Bovero; translation by A. de Cabo and G. Pisarello), p. 171. 25 C. JIMENEZ PIERNAS: Introducción al derecho internacional público. Práctica de España y de la Unión Europea, Madrid 2011, Tecnos Ed., pp. 50 and 65-66. 26 It is an international society, “in its way” to become a community, in the words of Prof. del Arenal: C. del ARENAL: Introducción a las Relaciones Internacionales, Madrid 2007, Tecnos Ed., p. 414. 27 “Lo que califica, pues, a una sociedad política como completa o perfecta es su “sibi sufficientia”, esto es contar con los medios materiales, institucionales y organizativos precisos para lograr el conjunto de

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into the full debate on to what extent there are shared values and its degree of

integration, we rather think that we are still far away from living in an ‘international

community’ in terms of shared objectives and ethics28.

This is a merely practical decision as far as we understand that, in terms of the

international normative structure, most of our work will remain in the field of

international organisations at an institutional level, also when dealing with States’

practice. This thesis has a primarily institutional perspective because we put the

institutional dimension of norms and practice first, sometimes before analysing its

substantive aspects, since this is the most adequate way to proceed in the field of

international organisations and when analysing their normative production29.

International organisations (IOs) have mainly institutionalised international cooperation,

which is a non-negligible role, while being an important channel through which IL has

undergone substantive changes30. CSR is just another example that shows an open path,

in which we further analyse the dialectic between treaty law and customary law in the

development of IL.

Sources

In line with the previous methodological considerations, the main sources are logically

the practice of the different international organisations at a global level, with a strong

emphasis on the European Union at a regional level, without isolating them from each

other so as to allow a rigorous and complete investigation. As said before, this

comprises the practice of some EU member-States that have put in place proper CSR

policies and, au-fur-et-à-mesure, we include lateral comments on the most prominent

condiciones sociales que permitan y favorezcan al pleno desarrollo de las personas, en que consiste el bien común. Ahora bien, como observa clarividentemente Suárez, tal auto-suficiencia nunca fue absoluta, ni siquiera en su época, en el momento de eclosión del Estado moderno […] ”. F. SÁNCHEZ-APELLANIZ VALDERRAMA: “Naturaleza y caracteres de la soberanía permanente sobre los recursos naturales”, in VVAA: Liber Amicorum. Colección de estudios jurídicos en homenaje al Prof. Dr. D. José Pérez Montero, Vol. III, Oviedo 1988, Universidad de Oviedo, pp. 1305-1328, at p. 1320. 28 In line with our arguments, the following pages summarise this debate: E. BARBÉ: Relaciones Internacionales, Madrid 2011, Tecnos Ed., pp. 131-135. 29 “En este ámbito del Derecho Internacional prima la dimensión institucional de las normas y de la práctica antes que la sustantiva”, O. CASANOVAS and A.J. RODRIGO: Compendio de Derecho Internacional Público, Madrid 2015, Tecnos Ed., p. 170. 30 J.A. PASTOR RIDRUEJO: Curso de Derecho Internacional Público y Organizaciones Internacionales, Madrid 2011, Tecnos Ed., p. 659.

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private-led initiatives born under the auspices of IOs (the Equator Principles, the Global

Compact, the Global Reporting Initiatives, the Dow Jones Sustainability Index, ISO

26000, etc.).

This international and institutional focus does not mean that States’ practice is less

important. On the contrary, States’ practice is a crucial source of International Law, but

our institutional perspective is precisely justified to the extent international institutions

are functioning as chemical accelerators of States’ initiatives. Nevertheless, in the

particular context of the European Union, we will also analyse the most prominent

national action plans together with some cutting-edge legislative changes in order to

further comment on the importance of their mere existence with regard to the customary

path –even regardless of the effectiveness of their contents.

Besides the multiplication of institutional initiatives, literature on CSR is vast and

disparate. We lack of systematic studies that clarify the current statu quo and the future

possibilities from a scientific and neutral perspective. Most of the initial information at

an academic level is found in specialised reviews rather than monographies, excluding

some prominent examples, due to the fact that we focus on quite recent developments.

For good or bad, a 2013-monography can be obsolete by 2015. For this reason, and due

to the ever-growing number of commentators, codes, leaflets, essays, press news, etc.,

we have had to be mercilessly selective with the bibliography and include only the most

representative authors and schools of thought.

We intersperse the practice of IOs and States (official documents, legislation and soft

instruments) with the incipient jurisprudence in this area, particularly advanced in the

US, the UK and Netherlands. Selected cases of national and international courts have a

double value: its typical interest as an application of IL, but also a potential recognition

of incipient customary practices. It goes without saying that doctrine will serve to

compare CSR to other law-fields and to contextualise it within general international law

and within EU Law. Some studies de lege ferenda will also be useful, but more rarely

used since we wish, above all, to conduct a realistic research. Everything together can

help us see the wood, not just the trees. We are not the ones to predict the future of

CSR, yet everything suggests that it came to stay.

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Plan of work

The key actors in the origin and development of CSR are international organisations

(IOs): mainly, the United Nations (UN), the Organisation for Economic Co-operation

and Development (OECD), the International Labour Organisation (ILO). At a regional

level, the European Union quickly took over and is now leading the way. Therefore, our

first chapter is focused on the UN initiatives, aimed at systematising them rather than

repeating their contents. Some core CSR debates are addressed en passant: the

differential characteristics of CSR, its related concepts (due diligence, legal personality,

grievance mechanisms), its legal composition (hard and soft law), the legal options to

operationalise it (a new treaty, the customary path or what we call the Europeans’ third

way), and the policy options to support it (national actions plans alongside the

institutional context).

At the end of the first chapter, we propose a definition of Corporate Social

Responsibility based on the international practice surveyed. The definition proposed is

supported throughout our research in view of IOs and States’ practice. On this basis,

Chapter II is consecrated to the assessment of the existing possibilities to mainstream

human rights into trade and investment issues, while arguing that IOs start to go all in

the same direction, in line with an increasing institutional coordination that already

delivers some substantive results.

The second part of this research focuses on the European contribution to global CSR.

Chapter III is aimed at bringing order into widely dispersed initiatives within the EU;

this reveals to be absolutely necessary because the available scientific literature usually

forgets to look at the same time at various law-fields (public procurement, corporate

governance, the environment, etc.). In this sense, one of the difficulties of CSR in the

EU is that, more than a separate policy, it has a strong crosscutting character. On the

whole, it shows the “predilection of the European Union to receive international norms

with open arms”, introduce substantive improvements and then “upload EU law and

legal policy preferences into the international legal development process”31. This will

help us analyse in the last chapter the potential contribution of the EU to global CSR.

31 N. SINGH GHALEIGH: “Iterative Engagements. The European Union and International Normativity”, in Proceedings of the Annual Meeting, American Society of International Law, Vol. 104 (March 24-27 2010), pp. 572-576, at p. 575.

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CHAPTER I

Corporate Social Responsibility at a global level

1.1 Globalisation and Human Rights

‘Business and human rights’ studies owe their growth to a double development,

accentuated in the second half of the 20th Century: the parallel expansion of

globalisation and human rights.

Without a doubt, International Human Rights Law (IHRL) is one of the best legacies of

the last century. This even more so, since it has not been a particularly enthusing or

inspiring period. Moreover, human rights have managed to evolve and overcome their

inherent original sin, according to Hannah Arendt’s critique: its paradoxical origin

linked to nationalisms in the end of the 18th Century and the 19th Century, when the

recognition of such rights was based on the exclusion of non-citizens32. Political rights

and human rights were firmly united until the latter emancipated themselves.

Interestingly, only later, the socially marginalised and politically excluded became the

priority of human rights, their raison d’être.

This positive evolution has continued with the proliferation of multilateral human rights

treaties, ranging from general issues (civil and political rights, economic and social

ones, both of 1966), to very specific subjects such as racial discrimination (1966), the

rights of the child (1989) or Apartheid in sports (1985), under the auspices of the United

Nations (UN). The most recent multilateral human rights treaty dates 2006 on the rights

of persons with disabilities. There has been a similar progress at a regional level, with

instruments like the Inter-American Convention on Human Rights (1969), the African

Charter on Human and Peoples’ Rights (1981) and the European Convention for the

Protection of Human Rights and Fundamental Freedoms (1950).

The human rights language has clearly penetrated the social tissue and media,

sometimes giving rise to misperceptions under which it seems that there are more and

32 “The whole question of human rights, therefore, was quickly and inextricably blended with the question of national emancipation”. H. ARENDT: The Origins of Totalitarianism (Part II: Imperialism), New York 1968 (Vol. II), Harcourt Ed., p. 171.

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more rights. In our view, the multiplication of international instruments should not be

read in terms of more rights, but as a progressive specification of these. The basic

misunderstanding lies in the fact that procedural aspects are mistaken for the rights at

stake: for example, the protection of cultural heritage, which has an increasing number

of specific treaties under the umbrella of the UN Educational, Scientific and Cultural

Organisation (UNESCO), has not leaded to new rights; it has detailed the contents of

the right to culture and the means to achieve it under an already existing human right –

article 15 of the International Covenant on Economic, Social and Cultural Rights

(ICESCR). The separation between cultural heritage and cultural rights under the

ICESCR is simply incorrect: its specificity might justify the existence of particular

treaties, the UN agency and specialised monitoring bodies, keeping however in mind

that cultural heritage is only a tool. Cultural heritage could be defined as “cultural

resources”33 without which we would deprive “the right to take part in cultural life” of

content. Similarly, the so-called ‘gay rights’ do not exist: they are only a desirable

aspect to be added to the general prohibition of discrimination. We could think of many

other examples. It seems to us to be legal common sense not to deprive the ICESCR of

content just because of the new challenges caused by globalisation and multinational

enterprises (MNEs). If we accept artificial separations between different human rights

sectors, we would just contribute to slide down the slippery slope to a fragmentation of

IL, against which we warned in the introduction34.

In other words, we face the increasing complexity of different human rights’

dimensions, not new rights disconnected from the general regime set out in IHRL,

which has to provide us with the contextualisation of any problematic, in our case, the

interaction between transnational companies (TNCs) and human rights. It is therefore

important to note that we do not defend the existence of new rights and responsibilities,

and we even see it risky to adopt such stance; we rather defend the full implementation

of already existing instruments and, if necessary, procedural advances and a progressive

but realistic interpretation to facilitate their effectiveness. This is connected to the on- 33 M. BIDAULT: La protection internationale des droits culturels, Louvain 2009, Université Catholique de Louvain - Ed. Bruylant, pp. 431-435. Also F. Francioni, from the Florence European University Institute, has supported interpretations in the light of general principles of international law when he considered the UNESCO Convention for the safeguarding of the intangible cultural heritage, in relation to other human rights instruments: F. FRANCIONI: “La protección del patrimonio cultural a la luz de los principios de derecho internacional público”, in VA: La protección jurídico internacional del Patrimonio Cultural, Especial referencia a España, Madrid 2009, Colex Ed., p. 32. 34 On the risks of fragmentation against the so-called ‘self-contained regimes’ in International Law, also refer to: C. JIMENEZ PIERNAS: op. cit., pp. 56-58.

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going debate on the need for adopting a new international instrument on business and

human rights, which we will study in our assessment of soft international law and the

effectiveness and usefulness of the current human rights’ regime dependent on

international treaties35. Corporate Social Responsibility (hereinafter CSR) was born out

of this intersection between business and human rights.

Of course, many voices still critically rise that we are dealing with the eternal problem

of legal moralism, within the framework of H.L.A. Hart’s polemic triangle constituted

by law, liberty and morality: delegalize morals or demoralize law?36 Transposing this

analysis to the international arena, social morality takes the form of an international

ordre public, in which we place human rights principles. In any case, moral

responsibilities and political responsibilities are more and more “inextricable” in a

global age37. Notwithstanding the fact that human rights clearly entail some sort of

ethics (and it would be cynical not to admit it38), some critiques also seem exaggerated

as far as there is a margin of appreciation to comply with the treaties so as to adapt their

requirements to a variety of cultural, economic and political particularities, not to

mention the concept of ‘progressive realization’ studied in the following section on

ESCR.

To continue with our previous examples: article 15 ICESCR on the right to culture does

not imply at all that access to culture shall be free, but available and accessible; it

happens the same with article 12 ICESCR on the right to health –these services do not

necessarily need to be delivered by the State through public institutions without any

cost, even though it should be available and accessible regardless of its ownership and

management39; nor the principle of non-discrimination obliges any State to adopt

legislation allowing “gay marriage” –provided there is no unlawful discrimination with

respect to LGTB people.

35 See below Chapter II, Section 3. 36 M. A. RAMIRO: “A vueltas con el moralismo legal” (Prologue) in H.L.A. HART: Derecho, libertad y moralidad (translation of M. A. RAMIRO), Madrid 2006, Dykinson Ed., pp. 9-88, passim. 37 “[D]ebates in international relations between those advocating for international morality and those denying it have become theoretically sterile”, R. BEARDSWORTH: “From Moral to Political Responsibility in a Globalised Age”, in Ethics and International Affairs, Vol. 29 No. 1, 2015, pp. 71-92, at p. 74. 38 As Amartya Sen pronounced: “human rights are quintessentially ethical articulations”, primarily an “ethical demand” that, later on, can have algo secondary legal articulations. A. SEN: “Elements of a Theory of Human Rights”, in Philosophy and Public Affairs, Vol. 32 No. 4, 2004, pp. 315-356, at p. 321. 39 OHCHR: Frequently Asked Questions on Economic, Social and Cultural Rights, Fact Sheet No. 33, Geneva 2008, United Nations, p. 20.

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Behind the critics’ reasoning we find the usual allegations of Western paternalism and

imperialism through human rights. If we accept the thesis of continuity according to

which there were no significant changes despite the fall of the Berlin Wall, we might be

tempted to maintain a bipolar discourse, converted into a North-South dialectic that

many authors support since the 1990s to keep up a “tale of two worlds: core and

periphery”40 –in economic terms. Nothing substantial would have changed and human

rights would have become a new ‘soft power’ strategy to keep on subjugating less

developed countries, following Nye’s terminology. Of course, the North-South narrative

might be partly true; also, some current international conflicts can perfectly be studied

under the continuity thesis (the recent crisis in Ukraine or US-Russia opposing views on

Siria’s war). However, the maintenance –with its adaptations– of a binary discourse

seems to oversimplify some important changes and many other factors that have to be

added since the end of the Cold War in a rather multipolar scenario, far from the ‘end of

history’ in the famous Fukuyama’s expression. This discussion only reflects our

difficulty to “introduce discontinuities into history” in increasingly complex scenarios

with a good amount of “chaos”41.

Accusations of imperialism against human rights also seem exaggerated taking into

account, for example, the widely disseminated Millennium Development Goals42, an

agenda aimed at increasing human rights respect and economic development, with eight

objectives that should have been accomplished before 2015: eradicate extreme poverty

and hunger, achieve universal primary education, promote gender equality and empower

women, reduce child mortality, improve maternal health, combat HIV/AIDS malaria

and other diseases, ensure environmental sustainability and promote global partnerships

40 Immediately after the collapse of the Soviet Block, a part of the academia supported the maintenance of a bipolar discourse, changed into a North-South dichotomy, allowed a partial salvation of political realism within less developed countries: “We thus tell the tale of two worlds of international politics in the post-cold war era. In the core, economic interdependence, political democracy […] In the periphery, however, […] interdependence between peripheral States is subordinate to dependence on core States. […] structural realism is inadequate to explain the behaviour of states in the core but is relevant for understanding regional security systems in the periphery”. J. M. GOLDGEIER and M. McFAUL: “A Tale of Two Worlds: Core and Periphery in the Post-Cold War Era”, in International Organization, Vol. 46 No. 2, Spring 1992, pp. 467-491, at pp. 469-470. 41 J. L. GADDIS: “International Relations Theory and the End of the Cold War”, in International Security, Vol. 17 No. 3 (Winter 1992-1993), pp. 5-58, at p. 52. Also see: J.E. CRONIN: The World the Cold War Made: Order, Chaos and the Return of History, New York 1996, Routledge Ed., passim. (xii+332pp) 42 Following to two Resolutions of the General Assembly in 2000: UNITED NATIONS: United Nations Millennium Declaration, Resolution adopted on 8th September 2000 (8th plenary meeting), New-York, 18th September 2000, UN Doc. A/RES/55/2, and the Follow-up to the outcome of the Millennium Summit, UN Doc. A/RES/55/162.

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for development. These objectives, which don’t seem particularly imperialistic, have

been partially achieved, apparently with good “reason[s] to celebrate”43, since extreme

poverty and the proportion of under-nourished people have both been reduced by half,

net enrolment rates in primary education have significantly increased in developing

countries and gaps between women and men steadily narrow, among other encouraging

signs. In this sense, we shall note that the mixture between human rights and economic

development generated the concept of sustainable human development upon which is

built the UN strategy. It must be underlined to what extent the new millennium has

inaugurated an utterly useful and unprecedented approach: that link between human

rights and economic development, very distant from previous morally-idealistic western

defences of human rights –which where precisely an easy target for criticism.

In sum, we dare say that most societies embrace human rights as a natural and desirable

development, despite the eventual critiques and political nuances. The adoption of the

human rights’ language includes almost all transnational actors; for example, the

Catholic Church, with 1200 million believers, has revived its “social doctrine” at the

end of the 20th Century –born at the end of the 19th Cent. with the Encyclical Letter

Rerum Novarum (Pope Leo XIII). Even H.H. Pope John Paul II expressed that a “type

of development which did not respect and promote human rights –personal and social,

economic and political, including the rights of nations and of peoples –would not be

really worthy of man”44. H. H. Pope Francis now includes explicit human rights’

concerns in very modern terms, as recently expressed with regard to the environment

and the “right to water”45 or, in more general terms, when it is acknowledged that “[i]n

the present condition of global society, where injustices abound and growing numbers

of people are deprived of basic human rights and considered expendable, the principle

of the common good immediately becomes, logically and inevitably, a summons to

solidarity and a preferential option for the poorest of our brothers and sisters”46. In any

case, one cannot but acknowledge that States’ obligations are gradually tougher in this

regard, with mixed results, and that societies have generally accepted this as a positive

evolution. 43 UNITED NATIONS: The Millennium Development Goals Report 2015, New York 2015, p. 4. 44 Encyclical Letter, Sollicitudo Rei Socialis (30 December 1987), 33: AAS 80 (1988), 557. 45 “Yet access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights”, advancing in their interdependence. Encyclical Letter, Laudato si –On Care of our Common Home (14 May 2015), para. 30 (p.23). 46 Ibíd., para. 158 (p. 117).

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In 2000, when the UN launched the 2015’ development agenda, it already recognised

the importance of partnerships to foster human rights and involve all actors of society

by giving “greater opportunities to the private sector, non-governmental organisations

and civil society, in general, to contribute to the realization of the Organization’s goals

and programmes”47. This is the international reflection of a wider process: State-centric

approaches are less self-sufficient than expected in a theoretically Westphalian system,

and it is more and more necessary to see the links between the State and society, which

could be regarded as two systems within a “metasystem”48, still relatively autonomous

but more and more intertwined, also at an international level. It should be noted by the

way that threats to the above-mentioned State-centric Westphalian system are numerous

and do not only derive from TNCs’ activities and globalisation: also international

human rights law has meant nothing more and nothing less than the gradual recognition

of a partial legal subjectivity of individuals in the international scenario. International

human rights law has also contributed to limit States’ sovereignty: internal violations of

human rights can no longer be considered as merely internal affairs within the domestic

jurisdiction49.

Parallel to the development of human rights, globalisation50 has rapidly consolidated to

further weaken the traditional concept of States’ sovereignty. This was already a central

problem of scientific literature in 194951:

“This ‘global’ era has made every region sensitive to the developments of far-distant lands; moreover its ‘popular’ base has changed the decisive forces in

47 UN Doc. A/RES/55/2, para. 30. 48 “En realidad, se trata de un nuevo planteamiento del problema clásico de las relaciones entre el Estado y la sociedad que, en términos de abstracción sistémica, podría expresarse de la siguiente manera: el sistema estatal y el sistema social, sin perjuicio de su respectiva autonomía, son partes de un metasistema, es decir, hay que considerarlos desde la perspectiva de un sistema más amplio en el que cada uno de los términos sirve a finalidades complementarias y posee cualidades y principios estructurales igualmente complementarios”. M. GARCÍA-PELAYO: Las transformaciones del Estado contemporáneo, Madrid 1995, Alianza Ed., p. 25. 49 In this case, we rather refer to an evolving practice within the international society, under which internal violations of human rights meet with the increasing disapproval at an international level. Naturally, this is a controversial issue, because article 2.7 of the UN Charter consecrates the principle of non-interference in domestic affairs, even though that practice has progressively developed the Charter in this particular aspect. J. SALMON (Dir.) : « Ingérence» and « Devoir d’ingérence », in Dictionnaire de Droit International Public, Bruxelles 2001, Bruylant Ed., pp. 579-580. 50 We are not interested in the conceptual and historical debate; we shall only note that Nye and Keohane focus on the interdependency between States and societies, as said before, while Hirschmann calls it a ‘vulnerable dependency’. A general reference at: J.C. PEREIRA (Coord.): Diccionario de Relaciones Internacionales y Política Exterior, Barcelona 2008, Ariel Ed., pp. 431-435. We want to thank Prof. Pereira for his academic orientation and support. 51 S. NEUMANN: “The International Civil War”, in World Politics, Vol. 1 No. 3 (April 1949), pp. 333-350, at p. 335.

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the conduct of international affairs. The time-honored concept, since Ranke’s day, of the ‘primacy of foreign affairs’ defining the internal natural and needs of the nations, has been increasingly replaced […] The frontiers between internal affairs and world politics –despite neat differentiations by the academicians– are irreparably blurred. This change calls for a new ‘international relations’, the outer contours of which are only dimly recognised. All fundamental concepts such as nationalism, sovereignty, intervention must be redefined”.

In the dawn of the new millennium, the UN General Assembly explicitly considered the

interdependence between human rights, development and globalisation. International

Organisations and its Member States had to be more proactive leaving room to the

“private sector, non-governmental organizations and civil society in general […] to

offset the negative economic and social consequences of globalisation”52. This

statement marks the official recognition that global capitalism is not an ever-progressing

and zero-sum phenomenon: there are advantages and opportunities alongside shortfalls

and negative side-effects that need to be addressed53. This process has deepened the

imbalances and tensions between States’ power, markets’ influence and societal

expectations, while increasing their interdependency and the unavoidability of

multilateral approaches to tackle the adverse impacts of globalisation. CSR can

contribute to alleviate these tensions as a complementary tool; the following diagram

shows, by the way, that societal expectations do not only create tensions in relation to

the markets, but also in relation to States’ power54, forming an isosceles triangle.

52 UNITED NATIONS (General Assembly): Role of the United Nations in promoting development in the context of globalisation and interdependence, Resolution of 20 December 2001, New-York 22 February 2001, UN Doc. A/RES/55/212, para. 9. 53 J. MARCHÁN: “La responsabilidad de los Estados en la protección de los derechos económicos, sociales y culturales ante la globalización”, in J. SOROETA LICERAS (Dir.): Los derechos económicos, sociales y culturales en tiempos de crisis –Cursos de Derechos Humanos de Donostia-San Sebastián Volumen XII, Pamplona 2012, Aranzadi Ed. (Thompson Reuters), pp. 79-106. 54 IHRL is, in origin, a way to alleviate the tension between societal expectations and States’ power, limiting the latter to a precise framework. It was traditionally assumed that States were the major –and, at a time, almost the only- human rights’ violators so the historically most important tension was between States and Societal Expectations. Globalisation has added new tensions creating the above triangle. In the words of Prof. Carrillo Salcedo, the government’s treatment of its own nationals is no longer an “internal matter”, but has become a concern under contemporary international law: “si el trato que un Estado diera a sus nacionales era en el derecho internacional tradicional un cuestión de jurisdicción interna (ya que el Derecho internacional no regía esta cuestión y se limitaba a regular la posición jurídica de los extranjeros), en el Derecho Internacional contemporáneo ocurre lo contrario como consecuencia de […] los derechos humanos”. J.A. CARRILLO SALCEDO: Soberanía de los Estados y Derechos Humanos en Derecho Internacional Contemporáneo, Madrid 1995, Tecnos Ed., p. 19.

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Diagram No. 1: The place of CSR in relation to the tensions of globalisation

A few figures can illustrate the current situation. The four major Chinese banks top the

famous Forbes 2000 list, but they are under public control. As a properly private

company, the biggest one in the world is an investment services enterprise founded in

1955 under the control of CEO Warren Buffet: Berkshire Hathaway, with $ 19’9 billion

in profits, exceeding the GDP of 85 countries in the world (individually taken, not

aggregated)55. We find it more enlightening to look at profits, instead of assets

(sometimes difficult to liquid), sales (before costs, taxes, etc.) or market value

(generally variable), in order to get a better idea of the power and influence of TNCs. To

take another source, Fortune also publishes the Global 500 list, according to which

Apple is the biggest company in terms of profits, amounting to $ 39’51 billion in

201456, over the GDP of 103 countries the same year. Walmart is also an off-cited

example: it has 2,200,000 employees, only a little less than the population of the

metropolitan area of Las Vegas (2,293,610 inhabitants), and more than the population of

the metropolitan areas of European capitals like Prague (1,910,396) or Stockholm

(2.018208)57.

TNCs’ impact on society is undiscussable, sometimes dramatically as we periodically

witness corporate scandals: the environmental and human disaster in Bhopal by Union

Carbide (1984), the ecological tragedy of Exxon Valdez in Alaska (1989), the labour

55 We are using the latest list published by Forbes (http://www.forbes.com/global2000/list) and data from the World Bank for the World’s GDP in 2014 (World Development Indicators Database, World Bank, 18 September 2015, available at: http://data.worldbank.org/data-catalog/world-development-indicators http://data.worldbank.org/data-catalog/world-development-indicators). 56 See: http://fortune.com/fortune500. 57 For the most recent data on the population of these cities see the OECD Statistics at: http://stats.oecd.org/Index.aspx?Datasetcode=CITIES# and EUROSTAT Regional Yearbook (2015, Chapter 15 on European Cities), available at: http://ec.europa.eu/eurostat/web/cities/publications.

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scandal in Nike’s subcontractors in Vietnam and Indonesia –including child labour–

since it was revealed in 1996-97; the French biggest oil company corruption case (Elf

Aquitaine, 1994); the financial frauds of Enron (2001), WorldCom (2002), Lehman

Brothers (2008); Tyco in 2002-2003 when a former CEO had stolen more than $100

million leading to a class action of defrauded shareholders; the $14 billion black-hole in

the Italian milk-processing company Parmalat, discovered in 2003 (the so-called

“Europe’s Enron”); also in 2003, the Dutch retailer company Ahold –number three in

the world– admitted to have inflated the benefits; Pfizer’s allegedly illegal drug trials in

Nigeria (1996) that led to John Le Carré’s novel (and subsequent film) The Constant

Gardener; and BP’s oil spill in the gulf of Mexico back in 2010, to quote only a few

examples with great media impact. The latest scandal occurs as we write these words:

the alleged fraud in diesel motors’ emissions within the German Volkswagen Group

(2015).

In spite of all, globalisation should not be the scapegoat for all the international deficits

in the area of human rights and development. The opportunities that TNCs can create in

developing countries are equally undeniable, in particular, when the exploitation of

resources depends on the availability of heavy investments. Of course, the pros and

cons of TNCs and global capitalism seem to generate an unstable or precarious

equilibrium. The UN ESCR Committee has pointed out that, even though recent

developments are not necessarily a threat to the provisions of the Covenant, it is equally

true that, taken together and without the complement of appropriate policies,

globalisation carries risks that need to be tackled in order to maintain the prevalence of

human rights and avoid a regression in their indivisibility and interdependency58.

By their nature, markets are simply amoral. Again, the Cold War created a sort of

competitive dynamic between the two blocks; Western countries came up with the

brilliant idea of the ‘social market economy’. We can speculate as to what extent the

presence of the soviet system served to maintain a healthy tension within capitalist

countries to continually demonstrate that they were better than communists, something

that became unnecessary after the fall of the Berlin Wall. Capitalism had no competition

anymore. Corporate practices and standards slackened. In our view, this constitutes a

58 ESCR Committee: Statement on Globalisation and Economic, Social and Cultural Rights, May 1998, UN-Doc. E/1999/22-E/C.12/1998/26, para. 3. For a further development in the area of ESCR, please refer to the following section of this chapter.

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crucial factor to explain the current problems –of course, together with other concurring

causes. Even George Soros (not at all a dangerous communist) warns on the amorality

of markets while societies cannot work “without some distinctions between right and

wrong”59. Nobel Prize Joseph Stiglitz also thinks that it is possible to “make

globalization work”: even though there are no ‘one-size fits-all solutions’, a teleological

interpretation of the current regulatory scenario might help. Particularly shocking is the

abuse of “limited responsibility” when it comes to make TNCs accountable: this figure

was actually created to allow and promote investments, without which “modern

capitalism” wouldn’t have grown as we know it, so that its purpose was not to release

director and managers from any liability for business operations60. But Stiglitz finally

states that “[o]ne thing that makes [him] hopeful is the corporate social responsibility

movement”61. This influence of TNCs is strong, being more an economic reality than a

clear-cut legal entity62, and a new balance needs to be found within the international

society.

In sum, the problematic is clear: to make globalisation and human rights compatible and

the contribution of CSR in this dialectic. Our first conclusion (and premise) is that we

do not believe there is any ontological incompatibility between globalisation and human

rights. In fact, implicit and dogmatic ontological incompatibilities are, in our view,

behind many conflictual misunderstandings in international relations: suffice the Arab

Spring to demonstrate that Islam and democracy are not necessarily antagonistic

59 G. SOROS: Globalizzazione, Milano 2002, Ponte Alle Grazie Ed., p. 19 (“La società non può funzionare senza qualche distinzione fra giusto e sbagliato”). The original English edition is: G. SOROS: On Globalization, London-New York 2002, Public Affairs Ed., 208 pp. 60 “Making matters worse is limited liability, which essentially defines corporations. Limited liability is an important legal innovation, and without it modern capitalism surely could not have developed. Investors in corporations with limited liability are at risk for only the amount of money they invested in the company, and no more. [p. 193][…] Limited liability has a major advantage: it allows huge amounts of capital to be raised, since each investor knows that the most he can lose is his investment. But limited liability can have large costs for society [p. 194] […] Limited liability was intended to limitd the liability of investors, not to absolve employees, however senior, of responsibility. But, as we have seen, sometimes that is the result [p. 203] […] Limited liability has underpinned the growth of modern capitalism; but with globalisation the abuses of limited liability have become global in scale; without the reforms suggested here, they could become far worse” (p. 210). J.E. STIGLITZ: Making Globalization Work, New York – London 2006, WW Norton Ed., pp. 193-194, 203 and 210 (extracted quotes above). 61 Ibíd., p. 210. 61 Ibíd., p. 210. 62 “Se le impresse multinazionali sono riuscite a orientare le scelte politice ed economiche degli Stati, diventa ora necessario trovare all’interno della Comunità Internazionale un accordo che permetta di tenere a freno le leve della globalizzazione economica, con un sistema di valori autenticamente condiviso e un più rigido controllo. In ogni caso, è necessario sottolineare sin d’ora che l’espressione società o impressa multinaionale o anche gruppo multinazionale identifica una realtà economica molto più che una entità giuridica”. F. BORGIA: La responsabilità sociale delle impresse multinazionali, Napoli 2007, Ed. Scientifica, pp. 20-21.

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concepts. A dogmatic and monocultural understanding of democracy is, of course,

incompatible with a dogmatic and monocultural understanding of Islam, as it would

probably happen with any pair of abstract notions. A concept is a unity of knowledge

useful to describe complex ideas and, if possible, improve the world around us. A too

stringent, unidirectional and short-sighted interpretation of terms like democracy,

human rights, development, or globalisation can give the erroneous perception that they

are incompatible with each other. In this vein, to make compatible globalisation and

human rights means to “narrow and ultimately bridge the [governance] gaps […]

created by globalisation”63, following the wording of the Special Representative of the

Secretary-General (SRSG) John Ruggie.

1.2 The particular problematic of Economic, Social and Cultural Rights

1.2.1. Context and legal evolution

Transnational companies’ activities mostly affect Economic, social and cultural rights

(ESCR) rather than civil and political ones (CPR), with the exception of the problems

derived from private security, freedom of expression and, very importantly, access to

justice64. But civil and political rights’ violations in cases involving TNCs are almost

always related to concomitant economic and social rights. ESCR have faced a number

of challenges that have marked their legal evolution up to date, when they have

managed to be consolidated in the corpus of international human rights law. This

process deserves to be evaluated to the extent it illustrates the frame difficulties of

ESCR and shall be kept in mind when we deal afterwards with more specific business-

related issues. Suffice the following considerations to point out that, in our view, the

main responsibilities remain with States, either to promote the effectiveness of human

rights treaties, either to prosecute third party violations.

63 HUMAN RIGHTS COUNCIL (UN): Protect, Respect and Remedy: a Framework for Business and Human Rights, Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises John Ruggie, UN Doc. A/HRC/8/5, 7 April 2008, para. 3. 64 Access to justice is studied in the second part of this work. See Chapter IV, Section 2.

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The human rights division in three generations, a very extended and divulgated idea,

was proposed by the French lawyer Karel Vasak in 197765. This division helped those

interested in marginalising ESCR to “decaffeinate” them, in which cultural rights were

clearly the Cinderella of the party66. Such a generational division is controversial and

very problematic as it suggests a hierarchy or, at least, an underlying order of

precedence67. The alleged second generation, ESCR, was largely considered as a group

of rights manly conducive to positive obligations even though, later, it has been verified

that both civil and political rights and ESCR entail positive and negative obligations for

States. The conflict between the Western bloc and the Soviet system during the Cold

War led, in sum, to the redaction in 1966 of two different and separated International

Covenants, what generated some confusion tending to forget that this distinction had its

origin in the political equilibria of that time without legal basis to be maintained later

on, as it has been reflected in a good part of the academia since the 1990’s68. The most

important juridical consequence was the discrimination between civil and political

rights and ESCR in their respective legal protection, both internally and internationally:

while CPR had a protection mechanism including individual complaints (first Optional

Protocol of the 1966 CPR Covenant), the same mechanism hasn’t been achieved for

ESCR until 2013.

This line of argument was confirmed in 1993 on the occasion of the World Conference

on Human Rights celebrated in Vienna, where was established the “universality,

indivisibility, interdependence and interrelation” of all human rights69. The indivisibility

and interdependence became fundamental principles of international human rights law,

added to older ones such as the inherent dignity of human being, participation and

equality, and non-discrimination.

65 K. VASAK: “A Thirty Year Struggle: The Sustained Efforts to give Force of Law to the UDHR” en UNESCO Courier, Nov. 1977, p. 29. 66 “Cultural Rights are the failed Cinderella of the international human rights lexicon –pretty to picture but they don’t quite make it to the ball”: D. McGOLDRICK: “Culture, Cultures and Cultural Rights”, in M. A. BADERIN and R. McCORQUODALE (Dirs.): Economic, Social and Cultural Rights in Action, Oxford 2007, Oxford University Press, p. 447. 67 C. FLINTERMAN: “Three Generation of Human Rights”, in J. BERTING et al. (Eds.): Human Rights in a Pluralist World: Individuals and Collectivities, London 1990, pp. 75-77. 68 Western opposition to ESCR during the Cold War is, in any case, discussable and probably there are not definitive answers. A good summary of this debate in: A. KIRKUP and T. EVANS: “The Myth of Western Opposition to Economic, Social and Cultural Rights? A reply to Whelan and Donnelly”, in Human Rights Quarterly, Vol. XXXI (2009), John Hopkins University Press, pp. 221-238. 69 Vienna Declaration and Program of Action, Part I, parr. 5, adopted by the (second) World Conference on human rights, Vienna, June 25th 1993, UN-Doc. A/CONF.157/24 (Part I, Chap. III).

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It should be recalled that the consolidation in Vienna of the doctrine of the indivisibility

and interdependence of human rights was not a spontaneous occurrence, but the

synthesis of several antecedents, in particular two previous texts. First of all, the Tehran

Declaration (1968), following to the first World Conference on Human Rights, already

expressed in quite modern words: “Since human rights and fundamental freedoms are

indivisible, the full realization of civil and political rights without the enjoyment of

economic, social and cultural rights is impossible” 70.

Secondly, a decade after, the same idea was reinforced with a General Assembly

resolution: “a) All human rights and fundamental freedoms are indivisible and

interdependent; equal attention and urgent consideration should be given to the

implementation, promotion and protection of both civil and political, and economic,

social and cultural rights; b)the full realization of civil and political rights without the

enjoyment of economic, social and cultural rights is impossible; the achievement of

lasting progress in the implementation of human rights is dependent upon sound and

effective national and international policies of economic and social development” 71.

In the eighties, the Declaration on the Right to Development (1986) continued in the

same direction and, finally, the already cited Vienna Conference in 1993 definitively

consolidated the indivisibility and interdependency of human rights, only when the

dissolution of the Soviet bloc had finished.

When the former Human Rights Commission was replaced by the Human Rights

Council, in place since March 2006, the United Nations insisted again in the

universality of all human rights, including the right to development and confirming a

wider level of consensus generali in this regard72.

This said, the international society, and especially developed States, continue to give a

preferential treatment to CPR despite the fact that the right to life has little sense if it is

not through, among other rights, the right to health, to adequate food or to adequate

housing.

70 Tehran Declaration, Final Document of the World Conference on human rights, Tehran, May 13th 1968, UN-Doc. A/CONF.32/41, para. 13. 71 Resolution of the General Assembly 32/130, of 16 December 1977, on the “Alternative approaches and ways and mean within the United Nations system for improving the effective enjoyment of human rights and fundamental freedoms”, para. 1, a) and b). 72 UN-Doc. A/RES/60/251, April 3rd 2006, preamble, para. 3.

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The core challenge is to convince developed States that both CPR and ESCR and the

right to development imply negative and positive obligations so that there aren’t

cheaper or more expensive rights and, in particular, that ESCR aren’t always more

expensive than CPR.

In the post-cold war era, globalisation, the growth of a deregulating capitalism, together

with privatisation enthusiasms, are the current challenges for ESCR, which continue to

lack of sufficient support, as it is the case of the United States Senate whose ratification

of the ESCR Covenant is still pending. The proliferation of non-State international

actors, such as transnational companies, that usually have a bigger factual power than

many States, is a proof of the new challenges for ESCR as stated in the previous

section.

In effect, though the progression has been notable, ESCR still suffer some historical

delay derived from their initial marginalisation within the family of human rights.

It is plausible to consider that the second major milestone since the Vienna Conference

came twenty years later when, the 5th of February 2013, Uruguay became the tenth

country to ratify the Optional Protocol of the ESCR Covenant, following the example of

Argentina, Bolivia, Bosnia and Herzegovina, Ecuador, El Salvador, Mongolia, Portugal,

Slovakia and Spain73. The entrance into force of the Optional Protocol, beyond its

symbolic importance, opens the possibility to advance in the justiciability of economic,

social and cultural rights as it allows individual complaints and ex officio investigations

by the ESCR Committee.

Another factor that has influenced the delay of ESCR is vagueness and the voluntarism

or programmatic character of many texts dealing with this category of rights, in which

we often find a mixture of references to socio-economic development and to its

progressive nature. A standard critique is that we move, in this sense, somewhere

between rights and politics.

Within the framework of the 1997 discussions on the reform of the United Nations, the

second Interagency Workshop was convoked for 2003. With the title: “Statement on a

Common Understanding of a Human Rights-Based Approach to Development

73 OHCHR News Press, February 7th 2013, available at: http://acnudh.org/2013/02/pillay-celebra-avance-que-permitira-la-presentacion-de-quejas-individuales-en-relacion-con-los-derechos-economicos-sociales-y-culturales/

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Cooperation”, the so-called Stamford Principles74 were born, intending to react to old

critiques by ESCR sceptics and simplify its framework. It was decided that some

principles had to be clear and two wordings had an instant success: the human rights-

based approach and human rights mainstreaming, which are both extremely useful to

study the role of international organisations to promote human rights amongst private

companies.

Those principles included the synthesis of half a century of work and, again, insisted on

the progress made in Vienna: universality, inalienability, indivisibility, interdependency

and interrelation between all human rights; together with the principles of non-

discrimination and equality, participation and inclusion, and the accountability in the

context of the rule of law.

This evolution of ESCR has founded the approach to development programs and good

practices among public and private entities, also in relation to the Millennium

Development Goals. It consists of a linguistic and conceptual shift75 in the initiatives

undertaken, above all aimed at implementing effectively the Vienna Conference,

promoting the coherence of the huge variety of specialised organisms within the UN

decentralised system, and inspiring other international organisations. For instance, there

are improvements to be noted in the development of ESCR, persisting some delay in

their justiciability, yet many States still consider there is more room for their margin of

appreciation with ESCR than with CPR76, what can hold back the States demands to

transnational companies.

74 The common understanding reached three principles: “1. All programmes of development cooperation, policies and technical assistance should further the realization of human rights as laid down in the Universal Declaration of Human Rights and other international human rights instruments. 2. Human rights standards contained in, and principles derived from, the Universal Declaration of Human Rights and other international human rights instruments guide all development cooperation and programming in all sectors and in all phases of the programming process. 3. Development cooperation contributes to the development of the capacities of “duty-bearers” to meet their obligations and of “right-holders” to claim their rights.” OHCHR: Frequently-asked questions on a human rights-based approach to development cooperation, New York and Geneva 2006, Annex II (Stamford Principles), p. 42. Available at: http://www.ohchr.org/documents/publications/faqen.pdf 75 “The debate regarding human rights based development has necessitated both a conceptual and language shift. This debate has benefited from advances made in asserting the legitimacy of socio-economic rights but has suffered also from some of the skepticism and resistance that has impeded the realization of socio-economic rights and been a feature, for example, of the debate on an Optional Protocol to the ICESCR”. P. TWOMEY: “Human Rights-Based Approaches to Development: Towards Accountability”, in M. A. BADERIN y R. McCORQUODALE (Dirs.): op. cit., p. 69. 76 J.A. PASTOR RIDRUEJO: “Sobre la universalidad del derecho internacional de los derechos humanos”, en Anuario de Derechos Humanos. Nueva Época, Vol. XII (2011), Universidad Complutense de Madrid, pp. 267-286. In English: T.A. O’DONNELL: “The Margin of Appreciation Doctrine:

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1.2.2. Levels of States’ obligations

In line with article 103 of the United Nations Charter, we consider the pre-eminence of

this organisation at an international level is clear, reason why we give this relative

importance to the UN practice in terms of human rights. In parallel with their legal

evolution and recognition, ESCR have generated levels of State obligation that we take

as a benchmark.

In view of the historical delay in the field of ESCR, it is only since the eighties of the

last century that a significant clarification of State obligations starts. All scientific

literature agrees with the importance of three crucial moments: Limburg Principles of

1986, the General Comment No. 3 of the ESCR Committee on the nature of State

parties obligations (1990) and the Maastricht Guidelines (1997).

The experts meeting in the University of Limburg in 1986 insisted again on the benefits

of the indivisibility doctrine at a moment when the international system was still divided

into two blocs, so that they took the precaution to explain that “[t]here is no single road

to their full realization. Successes and failures have been registered in both market and

non-market economies, in both centralised and decentralised political structures”.77

The most important conclusion is the proposal of an interpretation of articles 2 to 5 and

8 of the ESCR Covenant, aimed at clarifying their programmatic and progressive

character without giving carte blanche to exempt States from their obligations. It was

recalled that, in any case, the Vienna Convention on the Law of Treaties (1969)

establishes that provisions contained in a treaty have to be interpreted in good faith in

line with the object and purpose of the treaty (checking, if necessary, the preparatory

work of the treaty).78

Standards in the Jurisprudence of the European Court of Human Rights”, Human Rights Quarterly, Vol. IV (1982), John Hopkins University Press, pp. 474-496. A more recent revision after the end of the Cold War: J.A. SWEENEY: Margins of Appreciation: “Cultural Relativity and the European Court of Human Rights in the Post-Cold War Era”, The International and Comparative Law Quarterly, Vol LIV No. 2 (2005), pp. 459-474. 77 OHCHR: Economic, Social and Cultural Rights, handbook for National Human Rights Institutions, United Nations, New York and Geneva 2005, Annex 6 (Limburg Principles), pp. 125-135, para. 6 (of the Limburg Principles). 78 It is the principle “pacta sunt servanda” in arts. 26 and 31 of the Vienna Convention on the Law of Treaties, 1969.

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Part of the wording of the ESCR Covenant can be problematic or vague. The merit of

the Limburg Principles was to finally adjust its interpretation to real basic objectives: 79

- - Progressive realization could not justify inaction or disengagement from the State to

postpone sine die the satisfaction of a right included in the Covenant;

- - The efforts to the “maximum extent of available resources” should be understood as

including international cooperation, justifying assignments of resources in the most

efficient way to comply with “minimum obligations” and provide with “essential

services”;

- - “non discrimination” should be effective in order to avoid any case of indirect

discrimination; the adoption of measures “by all appropriate means” is understood for

this group of experts in a broader sense going beyond legislative initiatives.

The Limburg principles were extremely useful for the ESCR Committee during the

preparation of the General Comment No. 3 to delimitate State obligations, that is, the

problem of art. 2.1 of the Covenant, that didn’t give any tip on how the Committee

should decide whether if a State had allocated or not enough resources to ESCR, that is

to say, if ESCR budget was efficient and sufficient. This delicate work crystallised in

1990 with the adoption of General Comment No. 3, reflecting four years later the

experts’ conclusions in Limburg.

The obligation to adopt measures by all appropriate means includes any kind of

initiative, not only legislative. According to the terminology of the International Law

Commission, it implies obligations of result and obligations of conduct or behaviour.

Among the legislative measures, a classical example is the free choice of the State to

decide if the Covenant is transposed in the internal legal order or if it is not following a

monist perspective, regardless of the fact that specific regulations can be adopted for

particular rights. Nothing forces the States to prefer a way or another in the application

of Covenant and both options can lead to the satisfaction or to the violation of the

treaty80. Whether the Covenant is transposed or not, it does not determine the likelihood

of compliance, as it happens with almost any other measures at non-legislative levels.

79 Limburg Principles, para. 16 to 41. 80 ESCR Committee: General Comment No. 9, UN-Doc. E/C.12/1998/, para. 8. However, the ESCR Committe had already expressed a preference and recommended States to transpose the Covenant and adopt specific internal legislation (General Comment No. 3, para. 3). A transposition of the Covenant and the adoption of internal legislation would facilitate access to justice and remedies at a domestic level.

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All measures under art. 2.1 are subject to a certain margin of appreciation of States, as

admitted by the Committee81, to determine the most adequate measures to face its

specific circumstances.

This being so, the real obligation is to prove an active commitment in every field

(legislative, budgetary and political) in a way that leads to effective measures, in a

reasonability framework, to generate the expected and desirable results according to the

object and purpose of the Covenant. Guidelines on social corporate responsibility are

part of the policy makers’ effort to comply with the State obligation to promote the full

realisation of human rights; the Committee recurrently emphasizes in a number of

Country reports that the adoption of legislation at an internal level isn’t either sufficient

for the full realisation of ESCR.

To evaluate the design and adoption of such measures we encounter two problematic

concepts, as we have said above: the progressive realisation and the maximum available

resources. The gradual achievement of ESCR shows, in summary, the wish of the State

to comply with its obligation of results.

The ESCR Committee has recognised that the progressive approach reflects the

acknowledgement of a diverse material reality and of important inequalities in practice

within the international society. This shouldn’t be interpreted in the wrong direction; its

only purpose is to have a necessary flexibility device available for the variety of

difficulties that a State can experience to ensure the full effectivity of ESCR82.

To disentangle if progressivity is correctly applied in a concrete case according to the

terms of the Covenant we have two limits: on one side, inaction or disengagement of the

State, which does not need any further explanation and cannot be justified under

progressivity criteria. On the other side, eventual regressive measures aren’t either

acceptable. In fact, the ESCR Committee has very clearly established that regressive

measures constitute prima facie a violation of the Covenant and only have a justification

if a close and sound analysis of all best alternatives has been undertaken.83

81 ESCR Committee: General Comment No. 14, UN-Doc. E/C.12/2000/4 (on the right to health), para. 53. 82 ESCR Committee: General Comment No. 3, para. 9. 83 Ibíd., even though the Committee expressed more strongly the same idea in the General Comment No. 13 (UN-Doc. E/C.12/1999/10, on the right to education, para. 45): “If any deliberately retrogressive measures are taken, the State party has the burden of proving that they have been introduced after the most careful consideration of all alternatives and that they are fully justified by reference to the totality of

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The evaluation of the alternatives brings us back to the problem of “all available

resources”. The Committee has avoided complex economic and financial debates. To

avoid the fact that budgetary restrictions became a licence to violate the Covenant (by

an act or omission –with regressive measures, for example), the ESCR Committee

stipulated that the maximum available resources had to be read in a broader sense

including the potential benefits of international cooperation84.

The Committee believes that States cannot allege in any case lack of resources to

undermine two kinds of inevitable commitments: 1) basic minimum obligations or

“minimum essential levels of each right enshrined in the Covenant” 85; and “immediate

obligations”, among which non-discrimination, the adoption of measures (regardless of

their nature), and refrain from interfering or impeding the enjoyment of these rights86.

If we recapitulate the practice of the ESCR Committee, the evaluation of adequate

measures remains in a triangle whose apexes are: a) all available resources including

international cooperation; b) basic minimum obligations; and c) immediate obligations.

This did not discourage the Committee, on very few occasions, to comparing allocated

resources within a budget, regretting the usual disproportion between the financial

resources of military expenses and health or education87.

Politically speaking, the bad use or abuse of resources may seem evident; however, to

demonstrate this fact is an extremely difficult and delicate task from a legal point of

view. The Committee adopts in this regard all possible precautions as far as it is the

primarily entrusted body with the task of clarifying the provisions of the Covenant.

Corruption and hypertrophic military budgets are common, especially in countries

where transnational companies face most of their problems. Some help is provided in

the 2007 Declaration on the assessment of available resources when the Committee for

example did not include generalised corruption cases despite the opportunity to do so88.

the rights provided for in the Covenant and in the context of the full use of the State party’s maximum available resources”. 84 ESCR Committee: General Comment No. 3, para. 13. 85 Ibíd., para. 10. 86 Ibíd., para. 1 and 2. 87 M. SSENYONJO: op. cit., p. 64. 88 The statement entitled “An evaluation of the obligations to take steps to the “maximum available resources” under an optional protocol to the Covenant”, presents some criteria applicable if the State alleges lack of resources: “a) the country’s level of development; b) the severity of the alleged breach, in particular whether the situation concerned the enjoyment of the minimum core content of the Covenant; c)the country’s current economic situation, in particular whether the country was undergoing a period of

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The control of ESCR has also been improved through indicators, an effort undertaken in

conjunction with different organisations: the Office of the High Commissioner for

Human Rights (OHCHR) and other decentralised organisms of the UN system:

UNAIDS, UNICEF, UNESCO, etc., indicators than can give an effective idea of the

situation in a country.

In 1991 the Special Rapporteur Danilo Türk for the realisation of economic social and

cultural rights, appointed by the former Sub-Commission on Prevention of

Discrimination and Protection of Minorities, presented eight principles derived from the

Limburg ones and inspired in the General Comment No. 3. Danilo Türk’s report89

encouraged to pay close attention to the use of all available resources to attain the full

realisation of human rights. He equally stated that States have the obligation to

guarantee the respect of minimum core obligations, irrespective of any budgetary

constraint. As for our debate on business and human rights, it is interesting from his

report that the State’s commitment should not stagnate at an international level, but

permeate into society, through public institutions from top to bottom including national

and local entities and private organisms.

A new improvement towards the clarification of State’s obligations came in 1997

with a second experts meeting in Maastricht, which culminated in the Guidelines on

Violations of Economic, Social and Cultural Rights, where we already find mentions to

the new challenges in the post-Cold War era. Obligations of result and conduct were

included, as well as violations through acts and omissions, the margin of appreciation,

the minimum core obligations and non-discrimination. The ESCR has so far written

General Comments to clarify immediate effects and core obligations with respect to

every right of the Covenant.

After Maastricht’s experts meeting, we have to highlight the tripartite organisation

of States’ obligations, as if they were three components that help us measure the level of

compliance of the Covenant. The final terms of this tripartite division of State duties

followed Eide’s proposal, who used the verbs “to respect, protect and fulfil” (or satisfy).

economic recession; d) the existence of other serious claims on the State party’s limited resources; for example, resulting from a recent natural disaster or from recent internal or international armed conflict; e) whether the State party had sought to identify low-cost options and, f) whether the State party had sought cooperation and assistance or rejected offers of resources from the international community for the purposes of implementing the provisions of the Covenant without sufficient reason”. UN-Doc. E/C.12/2007/1, May 10th 2007, para. 10. 89 UN-Doc. E/CN.4/Sub.2/1991/17, para. 52.

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a) The respect means a distant attitude from the State, refraining from obstructing

or interfering in the enjoyment of the rights, narrowly linked to the freedom of action

and the immediate obligations analysed above (such as non-discrimination).

b) The obligation to protect attaches a more active role to the State to guarantee the

enjoyment of the rights, in front of eventual acts or activities that might threaten them,

accomplished by individuals, non-State actors like companies or agents under the public

authority. This protection operates through the implementation of policies, legislation,

regulatory frameworks and effective legal protection with inspections and all pertinent

implementation mechanisms. If a States fails to protect human rights in front of

transnational companies operations in its territory, from contracts and investments up to

the concrete activities in the field, it might also constitute a violation of the Covenant

according to this evolution of UN practice.

c) The third level usually eclipses the previous ones: “to fulfil” consists of adopting

all necessary measures for the full realisation of ESCR and, in particular, for those

persons who are not able to achieve it by their own means. This fulfilment has, in turn,

another three phases: to facilitate, to promote and to provide, even though it has been

wrongly interpreted in a maximalist conception. Far from obliging States to provide all

goods and services free of charge, in reality, it rather implies that obligation only when

individual lack of resources or during a crisis, as in general terms in would only oblige

to comply with minimum core obligations, to make them accessible and affordable

towards their progressive realisation.

Finally, the three general level of State obligations (to respect, protect and fulfil), as

well as the minimum core obligations and the immediate effects of the Covenant are all

dependent upon fundamental and transversal characteristics that help us finish this

general picture on the levels of State obligation. As we observe the evolving practice of

UN human rights bodies we have assisted to the authorised explanation of the

Committee, who has drawn an analytical framework for each right. The Committee

started with the right to housing, as for which some assessment factor were established

such as habitability, bearable costs, legal certainty and an adequate place90.

In 1999 this process was accelerated thanks to the important work of the Special

Procedures of the Human Rights Council, more politically flexible compared to the

treaty bodies (the Committees) or to the secretariat itself (the OHCHR). The Special

90 ESCR Committee: General Comment No. 4 (on the right to adequate housing), UN-Doc. E/1992/23, para. 8.

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Rapporteur on the right to education at that time, Katarina Tomasevski, particularly

helped in the generalisation of these factors, which gained accuracy calling them

“fundamental characteristics” 91.

This work went on in the same direction with the right to food, adding some

specificities of that mandate as adequacy, for example, intended to include its nutritional

richness, and the concept of sustainability was added92.

Back to the ESCR Committee, in 1999 these fundamental interrelated characteristics

were defined and, as we have said for the work of the Special Procedures, it was also

working on the right to education that the terminology was cleaned up and the

interrelated and essential features93 were extended to any right covered by the Covenant.

As for accessibility, two different aspects were separated: its physical dimension

and the economic one (called “affordability”). The essential contribution was that the

interrelated essential characteristics of all rights of the Covenant illustrated the

minimum core obligations of each right, the adoption of measures, the levels of respect,

protection and fulfilment.

The “4-A scheme” suffered some slight variations depending on the subject, but

could be summarised as follows:

-cultural acceptability, for example, drinking water might be healthy but has to be

culturally acceptable (colour or smell);

-adequacy, referring to its quality according to the needs of society;

-accessibility is, therefore, physical (available without discrimination); and

economical (affordability, as the Covenant does not oblige to provide rights free of

charge). Accessibility also means access to information94, to the decision making

process and access to justice and remedies, what is particularly important in cases

involving transnational companies.

-adaptability and sustainability, to make compatible economic development and

social rights.

On a global scale, the work of the UN human rights system has, in the last twenty

years, clarified the different levels of state obligations in terms of ESCR, in general and

91 Originally known as the “4 A Scheme”, initially integrated by availability, accessibility, acceptability and adaptability. UN-Doc. E/CN.4/1999/49, para. 50. 92 ESCR Committee: General Comment No. 12 (on the right to adequate food), UN-Doc. E/C.12/1999/5, para. 7 and 8. 93 ESCR Committee: General Comment No. 13 (on the right to education, cited above), para. 6, 7 and 50. 94 The first time accessibility included information was for the right to health. See General Comment No. 14, para. 12 and 35.

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specifically for each right. In the light of the practice of the United Nations, we have

analysed a terminology that has finally been accepted95 as authorised criteria to establish

State obligations in ESCR. The general levels of State obligations have to illustrate and

intersperse our study of the interaction between human rights and transnational

companies.

1.3 The United Nations: shaping CSR

Corporate Social Responsibility is an interdisciplinary area under development and the

current research will be far from constituting the last word. Our study is not aimed

either at repeating and summarising the diverse instruments issued by international

organisations96; instead, we would like to bring some order into a widely dispersed

documentation, starting with the UN framework and principles, the definition of CSR

and the systematisation of its contents. Some historical studies show that, under diverse

labels, CSR has somehow existed for a longer time than expected: precedents can be

traced back to the early 20th Century97. Politically speaking, the debate is evident as to

the role of social concerns within the diverse understandings of a ‘free market

economy’. From a legal perspective, the debate is further complicated by some blocking

dichotomies, mainly: hard law vs. soft law (and in connection to this, mandatory or

voluntary schemes), rights vs. duties, and the issue of objects vs. subjects of

International Law. Depending on the approach to these opposing terms, the word

‘responsibility’ will acquire a different meaning.

95 ESCR Committe: General Comment No. 15 (on the right to water and sanitation), UN-Doc. E/C.12/2001/11, parr. 53. Even other UN Treaty Bodies have included it; as a mere example: Committee on the right of the Child, General Comment No. 4, 2004, parr. 40 and 41, where the ESCR Committee is explicitly cited, or within the Special Procedures, the Guiding Principles on extreme poverty and human rights, by the Special Rapporteur on extreme poverty, UN-Doc A/HRC/21/39, “4-A scheme” cited referring to education (parr. 88.c). 96 Chronological and detailed summaries and analyses have been done by most of the authors cited in this section. We therefore omit detailed summaries of the documentation as it would add nothing new. The most authoritative texts are those of Jennifer Zerk, Bryan Horrigan, Surya Deva, David Bilchitz, Radu Mares, Doug Cassel and John Knox, together with John Ruggie’s diverse publications (footnotes below) and OHCHR’s reports. 97 In her PhD thesis, still one of the most comprehensive (and cited) studies on international CSR, Jennifer Zerk notes some precedents: in 1914, Henry Ford adopted an eight-hour working day when the usual one was nine hours; and in 1935 Johnson and Johnson published what could be considered the first ‘internal code’ to define the companies’ relations with a variety of social groups. See J.A. ZERK: Multinationals and Corporate Social Responsibility. Limitations and Opportunities in International Law, Cambridge 2006, Cambridge University Press, pp. 15-16.

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It comes as no surprise that the definition itself is controversial and there are a lot of

expressions that approximately refer to the same concept: corporate social performance,

social value creation or shared social value, corporate philanthropy, business ethics,

corporate citizenship, corporate sustainability, best practices, responsible business

conduct, etc. Definitions have been proposed by both public and privates actors. In 2001

the European Commission (EC) considered it was the “concept whereby companies

integrate social and environmental concerns in their business operations and in their

interaction with their stakeholders on a voluntary basis”98; ten years later, the EC

proclaimed it had simply become the “responsibility of enterprises for their impacts on

society”99, which seems stricter than the precedent definition. The OECD speaks of the

“private efforts to define and implement responsible business conduct”100; for the

OECD, responsible business conduct “entails above all complying with laws, such as

those on human rights, environmental protection, labour relations and financial

accountability, even where these are poorly enforced […] [and] responding to societal

expectations communicated by channels other than the law, e.g. inter-governmental

organisations, within the workplace, by local communities and trade unions, or via the

press”101. The OECD further clarifies that “[p] rivate voluntary initiatives addressing

this latter aspect of R[esponsible] B[usiness] C[onduct] are often referred to as

corporate social responsibility”102. For the UN CSR is just defined as “the corporate

responsibility to respect human rights”103. The diversity of definitions is clearly the first

difficulty for one who approaches CSR without previous information.

There are also a number of business initiatives with their own definitions. At an early

stage, a group of leading TNCs created the Business Leaders Initiative on Human

Rights104, which functioned between 2003 and 2009 and already incorporated a human

98 COM (2001) 366 Final, 18 July 2001, Green Paper promoting a European framework for Corporate Social Responsibility, para. 20 (at p. 6). 99 COM (2011) 671 Final, 25 October 2011: A Renewed EU Strategy 2011-14 for Corporate Social Responsibility, p. 6 (para. 3.1). The documentation of the European Union (EU) is studied in detail in chapters III and IV. 100 OECD: Guidelines for Multinational Enterprises, Paris 2011, OECD Publishing, p. 15 (para. 7 of the Preface). 101 OECD: Policy Framework for Investment User’s Toolkit, Paris 2011, OECD Publishing, Chapter VII, p. 2. The most recent edition dates 2015 but omits this clarification of “responsible business conduct” (2015 edition available at http://www.oecd.org/investment/toolkit/) 102 Ibíd. 103 UN Doc. A/HRC/8/5, para. 9. 104 This group ceased activities in 2009 when it considered that practical ways to introduce human rights respect into business practice were already clear and work had to move from definition to practice.

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rights’ perspective that, as we will argue, came to stay. But, at the beginning, most

private initiatives tended to avoid a strong human rights’ language. For example, the

private-led World Business Council for Sustainable Development defines CSR as “the

continuing commitment […] to behave ethically and contribute to economic

development while improving the quality of life of the workforce and their families as

well as of the local community and society at large” 105. The Global Reporting Initiative

(GRI), also private106, tends to focus on sustainability and economic development.

Non-profit and non-Governmental Organizations (NGOs), like Amnesty International

and Human Rights Watch, early emphasised the need to analyse “corporate behaviour

through human rights lens”107, correctly putting the accent on the human rights

dimension of CSR. For Transparency International, there is a “missing link” with anti-

corruption and it should include, beyond “the management of economic, social and

environmental impacts”, also the “relationships within the workplace and marketplace,

along the supply chain, in communities and among policymakers”108. But for different

reasons, none of these definitions seems completely satisfactory, as it will be explained

below. The proliferation of definitions and the constellation of lateral circumlocutions,

alongside the mixture of private and public initiatives, greatly contribute to confusion,

sometimes intently109.

Member companies included, inter alia, ABB, AREVA, Barclays, Coca-Cola, Ericsson, General Electric, Gap, HP, National Grid, Novartis Foundation for Sustainable Development. 105 Lord R. RICHARD HOLME and P. WATTS: “Corporate Social Responsibility: Making Good Business Sense, in World Business Council for Sustainable Development No. 10, available at www.wbcsd.ch. 106 Founded in Boston in 1997, GRI is one of the earliest purely private initiative, initially centred on environmental business sustainability, comprising periodic reports, and later expanded to more general ‘human rights and corruption’ objectives. It has issued up to four updates of their own guidelines. See: www.globalreporting.org. 107 HUMAN RIGHTS WATCH: Corporate Accountability: a Human Rights Watch Position Paper. Recommendations to the Special Representative to the U.N. Secretary General on Business and Human Rights, 8 September 2005. Available at: https://www.hrw.org/news/2005/09/08/corporate-accountability-human-rights-watch-position-paper. 108 TRANSPARENCY INTERNATIONAL: Corporate Responsibility and Anti-Corruption: the Missing Link?, Working Paper No. 1 (2010), p. 2. Available at: www.transparency.org. 109 Definitions of CSR usually hide an “agenda”. As noted by the philosopher Ludwig Wittgenstein, in the proposition 4.002 of his famous Tractatus Logico-philosophicus: “Language disguises the thought; so that from the external form of the clothes one cannot infer the form of the thought they clothe, because the external form of the clothes is constructed with quite another object than to let the form of the body be recognised”. L. WITTGENSTEIN: Tractatus Logico-Philosophicus (Introduction by Bertrand Russel; Translation by CK OGDEN revised by the author), New York 1999, Dover Edition, p. 45.

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Having said this, the most famous initiative so far is the UN Global Compact110: a

private led institution but with mixed public-private participants, which also includes

soft monitoring (annual reports called “Communications on Progress”). The UN Global

Compact incorporates 8,041 business participants (among which the 25% of Fortune

Global 500 Companies) and 4,449 non-business participants111, together with local

networks and the UN sponsorship. The Global Compact importantly combines

sustainability with explicit human rights criteria (principles 1 and 2 of the Compact),

revealing the UN input or influence when it was launched (it was Kofi Annan who came

up with the idea in 1999112) and the UN continuous support ever since. Despite its

private foundation and financing, the Global Compact has received the official

recognition of the UN General Assembly113 for its work and for the coordination

opportunities it creates between the public and private sectors in the area of business

and human rights114.

In this context, the G7 leaders gathered in Germany (June 2015) “strongly support[ed]

the UN Guiding Principles on Business and Human Rights and welcome[d] the efforts

110 Defined as a “voluntary initiative based on CEO commitments to implement universal sustainability principles and to take steps to support UN goals”, www.unglobalcompact.org. 111 UN GLOBAL COMPACT: Impact. Transforming Business, Changing the World (Report 2015), 205 pp., at pp. 48-49, online publication (ibid.) 112 In line with the increasing awareness on the need of private-public partnerships (see section 1 of this chapter), the Global Compact was the personal initiative of former UN Secretary-General Kofi Annan to gather UN agencies, Governments, Companies (who also keep financially alive the Compact), NGOs and CSOs around ten basic principles on business and human rights. In his own words at Davos (1999), the UNSG “propose[d] [… to] initiate a global compact of shared values and principles, which will give a human face to the global market”. It was formally constituted a year later (2000) at the UN Headquarters in New York, despite being a mixed public-private institution. See the Foundation website with a list of the companies’ financial contribution by years: www.globalcompactfoundation.org. 113 See for instance GENERAL ASSEMBLY (UN): Resolution “Towards global partnerships: a principle-based approach to enhanced cooperation between the United Nations and all Relevant Stakeholders”, 7 February 2014, UN Doc. A/RES/68/234, para. 7, 9 and 11 (specifically acknowledging the UN Global Compact and looking forward to increasing the cooperation). 114 The UN Global Compact is still one of the most representative private institutions. Any company can adhere by sending a formal letter to the UN S-G, committing to summit a communication on progress two years later and to engage in active dialogue within three months if a complaint is received. The likelihood to participate in the Compact depends on the presence and relations between the UN and the home country of the company, markets’ influence, the strength of local CSOs and NGOs (social pressure), the pressure of local and international politics plus the eventual costs of being excluded (mainly at a reputational level). See in this regard: P. BERNHAGEN and N.J. MITCHELL: “The Private Provision of Public Goods: Corporate Commitments and the United Nations Global Compact”, in International Studies Quarterly, No. 54 No. 4 (2010), pp. 1175-1187, at pp. 1178-1179. The problem of incorporating the word “UN” within its own name, despite being a mainly private-multi-stakeholder forum, has raised concerns of “blue-washing”. The UN repeatedly clarifies that the logo is different and that exclusions from the Compact and a list of “inactive companies” would avoid this risk of using the UN’s image to the benefit of non-compliant enterprises. A good state of play at: C. VOEGTLIN and N.M. PLESS: “Global Governance: CSR and the Role of the UN Global Compact”, in Journal of Business Ethics, Vol. 122 No. 2 (2014), pp. 179-191, passim.

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to set up substantive National Action Plans” and “urge[d] the private sector

implementation of human rights due diligence”115. On companies’ side, we cannot turn

a blind eye to the multiplication of private initiatives; suffice it to add two last

examples: the creation of the Dow Jones Sustainability Index (DJSI) in 1999, and the

Equator Principles, launched in 2003, to assess environmental and social risks among

financial institutions (mainly private, but also public ones). How did we get to this

expansion and status of CSR? Undoubtedly, it has emerged as a permanent item on the

international agenda, to a large extent determined by the UN commitment in the area of

‘business and human rights’.

This section will first assess the role of the UN in reviving and setting the global CSR

agenda, the UN initial leadership, to discuss afterwards the surrounding controversies.

We end up proposing a definition of CSR.

1.3.1 CSR and the United Nations: a new momentum

If we leave aside the initial OECD approach (the 1970s first version of the Guidelines

on Multinational Enterprises), the UN has played a prominent role in reviving,

consolidating and clarifying CSR.

The well-known human rights’ primacy in the UN Charter (article 1, purpose No. 3 of

the Organisation) has recently been blended with the pursuit of “higher standards of

living, full employment, and conditions of economic and social progress and

development”, in the exact wording of article 55 of the same Charter. The UN

contribution can be divided into two periods; before and after 2005/2006. There are

both institutional and substantive reasons to make such a separation that year. In 2006,

the Human Rights Council (HRC) is constituted by the General Assembly116 to replace

the former Commission on Human Rights. Furthermore, it coincides with the then

Commission’s request to appoint a Special Representative of the Secretary-General

(SRSG) on the issue of human rights and transnational corporations and other business

115 G7: Leaders’ Declaration, G7 Summit, Germany, 7-8 June 2015, p. 6. 116 GENERAL ASSEMBLY (UN): Resolution adopted on the Human Rights Council, 15 March 2006, UN Doc. A/RES/60/251, 3 April 2006.

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enterprises for “an initial period of two years”117. The then Secretary-General Kofi

Annan finally appointed John Ruggie118 (28 July 2005), a Harvard Professor that had

already served him as Assistant and Senior Adviser for strategic planning between 1997

and 2001. He had also participated in the creation of the above-mentioned UN Global

Compact and in the elaboration of the MDGs. We therefore distinguish two periods in

this section, before and after 2005/2006.

It must be said that related issues had already been addressed by different organs of the

UN since the late 1990s, very prominently by the Security Council. For example, with

regard to Irak in 2003, it affected some TNCs to ensure humanitarian relief through the

prioritisation of basic goods and the renegotiation of some contracts119. In the case of

Sierra Leone (and later, other countries), the Security Council dealt with illegal trade in

diamonds120 and, finally, even “welcomed” and “strongly support[ed]” the Kimberley

Process Certification Scheme121, by which the relevant companies and governments

adopted a mixed self- and co-regulatory scheme to avoid fuelling armed conflicts and

connected human rights’ violations. The Kimberley Process is an exceptional milestone

to the extent the Security Council explicitly considered and upheld a “voluntary system

of industry self-regulation”122.

Back in 1998, the then Sub-Commission on the Promotion and Protection of Human

Rights established a Working Group (WG) on TNCs123, whose mandate was extended

until 2004. This first WG was asked to study the activities of TNCs and the way IHRL

could address that problematic. It was clear that the previous initiatives of the 1970s, the

OECD Guidelines on MNEs and the ILO Tripartite Declaration of Principles

concerning Multinational Enterprises and Social Policy (first edited in 1977), both had

117 COMMISSION ON HUMAN RIGHTS (UN): Resolution on Human rights and transnational corporations and other business enterprises, 20 April 2005, UN Doc. E/CN.4/RES/2005/69, para 1. 118 UN Doc. SG/A/943. See press release at: http://www.un.org/press/en/2005/sga934.doc.htm 119 SECURITY COUNCIL (UN): Resolution (on Irak), 28 March 2003, UN Doc. S/RES/1472 (2003), para. 4 (-empowering the S-G to adopt the necessary measures to conduct such negotiations). 120 SECURITY COUNCIL (UN): Resolution (on Sierra Leone), 4 December 2002, UN Doc. S/RES/1446 (2002). 121 SECURITY COUNCIL (UN): Resolution “on the illicit trade in rough diamonds”, 28 January 2003, UN Doc. S/RES/1459 (2003), para. 1. 122 Ibíd., para. 2. 123 The Sub-Commission’s Resolution 1998/8 of 20 august 1998, established a mandate extended in Res. 2001/3 of 15 august 2001 for three additional years.

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obvious deficits, since they lacked of enforcement tools and had “toothless dispute

resolution procedures”124.

Against this background, the then Sub-Commission wanted to go a step further towards

a systematic approach instead of contingent, soft and case-by-case actions125. The work

of the WG materialised in the famous Draft UN Norms126, which aroused the

enthusiasm of NGOs and activists whereas Member States and TNCs remained very

critic. The areas covered were non-discrimination, the right to security of persons,

workers’ rights and the environment, while institutionalising ‘stakeholders’

participation. The phrasing recurred to many undetermined legal concepts, which

contrasted with the eventually hard implementation measures127.

Indeed, the Norms directly addressed TNCs and placed on them direct obligations, so

that it could be interpreted as a quite revolutionary “restatement of human rights

law”128, since IHRL is founded on States’ direct responsibility –at least in vigilando

when it comes to violations caused by third-parties / private actors, who might only be

bound indirectly, via domestic law. Ten years later, the feeling is still widespread that

the Norms “were ahead of their time”129. Despite the lively debate (diplomat-speak for

‘lack of consensus’), the Sub-Commission considered the draft Norms to “reflect most

of the current trends in the field of International Law, and particularly international

human rights law”, and approved them in the form of a draft resolution130. At the upper

level of the Commission, however, the text was thrown back and blocked. The

124 D. CASSEL: “Does the World Need a Treaty on Business and Human Rights? Weighing the Pros and Cons”, Conference held at the Notre Dame University London Centre, May 14 (2014) –not published. We take this opportunity to thank Professor Cassel for his academic advice and friendly help since our first meeting within the framework of the LL.M on IHRL in the University of Alcalá (Madrid). 125 The Sub-Commission issued various reports in which it summarised its progressive interpretation of IHRL and the results of diverse consultation processes (see UN Doc. E/CN.4/2005/91 of 15 February 2005), and also on specific issues such as extractive industries (see UN Doc. E/CN.4/2006/92 of 19 December 2005), including the identification –treaty by treaty- of private duties in IHRL and its stand for clear extraterritorial measures. 126 UN Doc. RES E/CN.4/SUB.2/2003/12/REV.1 127 SUB-COMMISSION ON HUMAN RIGHTS (UN): Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, UN Doc. E/CN.4/Sub.2/2003/12/Rev.2, para. (draft articles) 15 to 19 (on implementation). 128 J.H. KNOX: “The Ruggie Rules: Applying Human Rights Law to Corporations”, in R. MARES (Ed.): The UN Guiding Principles on Business and Human Rights. Foundations and Implementation, Leiden-Boston 2012, Martinus Nijhoff Publ., pp. 51-83, at p. 53 (and ff.). 129 B. HORRIGAN: Corporate Social Responsibility in the 21st Century. Debates, Models and Practices Across Government, Law and Business, United Kingdom 2010, Edward Elgar Pub. Ltd., p. 318. 130 SUB-COMMISSION ON HUMAN RIGHTS (UN): Draft Resolution on Responsibilities of Transnational corporations and other business enterprises with regard to human rights, 7 August 2003, UN Doc. E/CN.4/Sub.2/2003/L.8, p. 2 (citation).

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Commission on Human Rights strongly rejected the Norms and felt compelled to clarify

that the draft had “not been requested by the Commission” and had “no legal

standing”131. In fact, John Ruggie’s first interim report in 2006 stated that the draft

Norms were “engulfed by its own doctrinal excesses” and included “exaggerated legal

claims and conceptual ambiguities”132, in a “deliberately undiplomatic language”133 as

Ruggie himself recognised in a book of reflections after his mandate. Later on, the very

first sentence of one of the most important reports submitted in 2008 by John Ruggie

more softly rebuked the former Sub-Commission insisting on the fact that the

“international community is still in the early stages of adapting the human rights regime

to provide more effective protection […] against corporate-related human rights

harm”134.

As mentioned earlier, a new momentum for CSR arrived with the appointment of John

Ruggie and his significant contribution between 2005 and 2011135, when his mandate

expired. The appointment of Prof. Ruggie might be related to the agitation in the after-

match of the Draft UN Norms, which ignited dormant controversies. We may argue the

draft Norms were even counter-productive as a maximalist wish list that rearmed CSR

detractors. Ruggie’s appointment somehow responded to the need to unblock the

situation136 and reinstall a consensus-oriented negotiation. Within the UN human rights

system, the mandate as SRSG on the issue of human rights and transnational

corporations and other business enterprises corresponds to the Special Procedures

Branch (SPB) of the HRC, being in this case a thematic mandate137. In comparison to

131 COMMISSION ON HUMAN RIGHTS (UN): Resolution 2004/116 on the Responsibilities of transnational corporations and related business enterprises with regard to human rights, 20 April 2004, UN Doc E/CN.4/2004/L.11/Add.7 p. 81 ff. 132 COMMISSION ON HUMAN RIGHTS (UN): Interim Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises, 22 February 2006, UN Doc. E.CN.4/2006/97, at para. 59. 133 J.G. RUGGIE: Just Business. Multinational Corporations and Human Rights, New York 2013, WW Norton & Comp. p. 54. 134 HUMAN RIGHTS COUNCIL (UN): “Protect, Respect and Remedy: a Framework for Business and Human Rights”, Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises John Ruggie, 7 April 2008, UN Doc. A/HRC/8/5, para. 1 (emphasis added). 135 His mandate was further extended in 2008 for an additional period of three years. HUMAN RIGHTS COUNCIL (UN): Resolution on the mandate of the SRSG on the issue of human rights and transnational corporations and other business enterprises, 18 June 2008, UN Doc A/HRC/8/7, para. 4. 136 B. HORRIGAN: op. cit., p. 320. 137 It is assumed the reader is familiar with the United Nations system in relation to human rights protection. For a detailed study on the Special Procedures, we recommend the diverse publications of Prof. Elvira Dominguez (Middlesex-University, London), whom we sincerely thank for her longstanding friendship and willingness to help: E. DOMINGUEZ: “Public Special Procedures under Damocles Sword”, in Human Rights Law Journal, Vol. 29 No. 1 (2008), pp. 32-40, and E. DOMINGUEZ: “Rethinking the Legal Foundations of Control in International Human Rights Law: the Case of Special

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Treaty Bodies and other UN mechanisms, the SPB constitute a more flexible and

political tool, less legally straitjacketed and thus more adapted to the multifaceted

challenges of CSR.

The main outcome of Ruggie’s first mandate is the three-level framework “Protect,

respect and remedy”138, by which States have the primary and more active duty to

ensure human rights’ protection, to comply with their international obligations and

make them permeate into their internal legal orders. In this sense, States’ duty shall be

understood as a holistic commitment to re-examine existing and future legislation,

international agreements and policy actions from a human rights perspective. It further

encourages specific legislative and political initiatives to improve human rights respect

among companies. Unlike the Draft UN Norms, Ruggie’s framework consequently

restores the “bedrock role of States”139. Secondly, companies are expected to respect

human rights, a “baseline responsibility”140, linked to the compliance of existing

legislation and, if possible, moving beyond and adhering to international standards and

codes of conduct. In our view, the emphasis lies on prevention, “independently of

States’ duties”141 so that the enterprises operating in conflictive areas (because of armed

conflicts or fragile and failed States) would show the same commitment regardless of

weak governments or weak enforcement mechanisms. Finally, both States and

Companies must cooperate to provide access to remedies (third level of the framework),

without excluding –or even fostering– non-judicial and non-state-based grievance

mechanisms –provided these comply with certain minimum criteria; in any case, we are

rather unconvinced of the effectiveness of such mechanisms if state-based and purely

judicial ones are not strengthened, available and reliable142.

The complementarity of the three levels would help reduce the governance gaps

generated by globalisation in the protection of human rights. Ruggie’s framework

Procedures”, in Netherlands Quarterly of Human Rights, Vol. 29 No. 3 (2011), pp. 261 ff. For a comprehensive overview on the protection of human rights in the United Nations see: C. VILLÁN DURÁN and C. FALEH PÉREZ: Manual de Derecho Internacional de los Derechos Humanos, Madrid 2012, Universidad de Alcalá. 138 UN Doc A/HRC/8/5. 139 Ibíd., para. 50. 140 Ibíd., para. 54. 141 Ibíd., para 55. 142 Ruggie identifies six criteria that would make non-judicial and non-state based grievance mechanisms acceptable: they ought to be “legitimate, accessible, predictable, equitable, rights-compatible and transparent”. Ibíd., para. 92.

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summarised extensive consultations made between 2005 and 2008143 and complemented

his preliminary report. The SRSG produced an utterly useful state of the art, especially

interesting in relation to access to justice and the current possibilities to facilitate

effective remedies for corporate-related human rights victims, but shows some

weaknesses. In terms of access to justice, we have already noted that it wide opened the

door to non-judicial and non-state grievance tools, someway oddly put on equal foot

with traditional access to courts. It would have been more adequate to further develop

the current –though scarce– possibilities for human rights victims to fil suits144. As for

the second level on corporate respect, it seems to be built upon a profusion of

undetermined legal concepts (“due diligence”145, “complicity” and “spheres of

influence”). These notions do not provide a sufficiently solid ground to assign a

responsibility in practice. John Ruggie tried to explain these concepts in separate

reports146, in the form of goodist exercises lege ferenda without much success.

At this stage, Ruggie’s success was fairly political and lied on his capacity to set

himself up as an authoritative voice in this subject, acceptable for all relevant actors and

subjects, in order to take away the bitter taste of the precedent UN attempt (the draft

Norms) and renew the Organization’s efforts towards a “more systemic response with

cumulative effects”147. As cited above, the HRC “welcomed” this three-level framework

in Resolution 8/7 and extended until 2011 the SRSG’s mandate.

The United Nations Guiding Principles (UNGPs) were the final result of Ruggie’s

mandate. Above and beyond criticisms and debates, it is important to support the

change of mind-set confirmed with the UNGPs and already present in the three-level

framework: the definitive priority was to detect practical “implications of existing

standards”148 in lieu of creating new instruments or new obligations under IHRL. We

143 HUMAN RIGHTS COUNCIL (UN): Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises, Addendum on Corporate responsibility under international law and issues in extraterritorial regulation: summary of legal workshops, 15 February 2007, UN Doc. A/HRC/4/35/Add.2. 144 Given its complexity, this problematic is further studied in a separate section (Chapter IV, Section 2). 145 On this concept we recommend referring to the PhD thesis of Prof. Lozano Contreras: F. LOZANO CONTRERAS: La noción de diligencia debida en derecho internacional público, Barcelona 2007, Atelier Ed., 340 pp. 146 HUMAN RIGHTS COUNCIL (UN) : Clarfying the Concepts of Sphere of Influence and Complicity, Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises John Ruggie, 15 May 2008, UN Doc. A/HRC/8/16. 147 UN Doc. A/HRC/8/5, op. cit., para. 106. 148 “The Guiding Principles’ normative contribution lies not in the creation of new international law obligations but in elaborating the implications of existing standards and practices for States and

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fully support this aspect of Ruggie’s approach in the present research: there are

possibilities, already in place, to improve the dialectic between business and human

rights (this idea is partly explored in the following chapter, when we track some of

those current possibilities). It is also important to point out that, while recognising that

CSR “morphed out of corporate philanthropy”149, Ruggie finally suggests that they are

separate concepts by now: “Business enterprises may undertake other commitments or

activities […] [b] ut this does not offset a failure to respect human rights throughout

their operations [emphasis added]”150, introducing this way some kind of necessary

connection with the impacts caused by the concrete activity of the enterprise at stake.

This will be very important in the definition we propose later.

At the same time, John Ruggie was also right to stress the vital role of States, which

need to be more proactive in translating their international obligations into their

domestic legal systems. Otherwise, without an active engagement at the State level, the

UNGPs are not likely to have a positive impact in practice151, despite being in

themselves a significant and substantive twist of IHRL in its interaction with global

business. At the State level, Ruggie builds on the crucial difference between legislative

initiatives and ‘policies’152, and the importance of ensuring the human rights

compatibility of any existing/future and legal/policy action throughout all governmental

departments153, including apparently unrelated fields such as company law, investment

agreements and trade policies within international institutions154.

Besides these essential aspects of the UNGPs, on which we absolutely agree with the

SRSG, we shall recall that their basic goal was to ‘operationalise’ the three-level

framework. There are, of course, some procedural good ideas, such as the general

emphasis on prevention, the so-called ‘human rights impact assessments’, the

importance of broad consultations alongside stakeholders, human rights experts and

businesses”, HUMAN RIGHTS COUNCIL (UN): Report of the SRS on the issue of human rights and transnational corporations and other business enterprises John Ruggie, “Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework”, 21 March 2011, UN Doc. A/HRC/17/31, para. 14. Hereinafter, we will refer to the Guiding Principles with the corresponding number (Guiding Principle 1, 2, etc.), as annexed to this report. 149 J.G. RUGGIE: Just Business…, op. cit., p. 68. 150 Guiding Principle 11 (commentary). 151 S.A. AARONSON and I. HIGHAM: “Re-righting Business: John Ruggie and the Struggle to Develop International Human Rights Standards for Transnational Firms”, in Human Rights Quarterly, Vol. 35 No. 2 (2013), pp. 333-364, at p. 337. 152 Guiding Principle 3. 153 Guiding Principles 8 and 9. 154 Guiding Principle 11.

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‘auditors’, the usefulness of follow-up resorts, and internal capacity-building

initiatives155.

However, in the overall, the UNGPs don’t succeed in “clearly articulating this crucial

distinction between decisions [policies] and processes of companies”156. In this

connection, they constitute a failed opportunity to really clarify corporate “due

diligence” and related concepts, as said before. Due diligence is a double-edged sword

and can also benefit non-compliant companies to be easily discharged or absolved “if it

can demonstrate and document a certain standard of precaution taken”157, no matter how

limited it may be. The risk is there that companies end up “perceiving human rights as

risks and due diligence as a ‘defence’ to ward off suits”158, and not as a minimum

“precondition” for any business. We can give yet another turn of the screw to this

problem, revealing the absolute “need of clarification”: on one hand, we have noted that

due diligence can limit the risk of complicity liability but, on the other hand, it will not

fully exempt companies from incurring in such liability so that, in some cases,

companies may be tempted to avoid any policy of due diligence if this means to

“acquire knowledge which could be held against it in the context of a complicity

charge”159.

In more general terms, continuing with the second level of Ruggie’s framework and

guidelines, it can be asked if “can implies ought”. Ruggie’s book of reflections,

published in 2013, contains a contradiction: it first states that “can implies ought”, but

only partially because companies’ influence must be strong enough to imply some kind

of duty: “it is one thing to ask companies to support human rights voluntarily where

they have influence, as the Global Compact does; but attributing legal obligations to

them on that basis for meeting the full range of human rights duties is quite another”160.

155 Guiding Principles 18 to 21. 156 S. DEVA: Regulating Corporate Human Rights Violations. Humanising Business, London-New York 2012, Routledge Ed., p. 208. 157 B. FASTERLING and G. DEMUIJNCK: “Human Rights in the Void? Due Diligence in the UN Guiding Principles on Business and Human Rights”, in Journal of Business Ethics, Vol. 116 No. 4 (2013), pp. 799-814, at p. 807. 158 As stated by Surya Deva, “they have a responsibility to respect human rights as a precondition to doing business and irrespective of whether human rights pose risks or opportunities for them”. S. DEVA: “Guiding Principles on Business and Human Rights: Implications for Companies”, in European Company Law, Vol. 9 No. 2, April 2012, pp. 101-109, at p. 107. 159 S. MICHALOWSKI: “Due Diligence and Complicity: a relationship in need of clarification”, in S. DEVA and D. BILCHITZ (Eds.): Human Rights Obligations of Business. Beyond the Corporate Responsibility to Respect?, Cambridge 2013, Cambridge University Press, pp. 218-242, at p. 240. 160 J.G. RUGGIE: Just Business…, op. cit., p. 50.

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Interestingly, later in his book, he explains that “a social norm expresses a collective

sense of ‘oughtness’ with regard to the expected conduct”161 of companies. This is

probably an inadequate and confusing normative foundation to operationalise the

second level of the UN guidelines, essentially for the reason that social expectations are

the less important –eventual– source of normativity (if they might even have that

status), the forgotten source is simply IHRL and its permeation into the internal legal

order, by which it should affect the behaviour of non-State actors162.

Also related to the second level (on companies’ respect), “spheres of influence” –

connected to due diligence– are an even fuzzier notion, a “metaphor” by which the

SRSG refers to suppliers and ‘related companies’ (subsidiaries, branches, etc.), up to

almost any stakeholder. It would have been interesting to have a closer look at company

law and taxation law. Within complex transnational corporate groups, international

company law and taxation law can provide inspiration on how to determine more

accurately the actual corporate relationships (hence responsibilities), starting with the

assessment of ‘corporate veils’ and ‘frauds’, and related issues that might legitimately

be extrapolated to human rights cases163, provided some obvious differences.

Many other problems already signalled before remain equally unsolved. In an interview

after the end of his mandate, the former SRSG tried to hide behind the then on-going

Kiobel judgement (US Supreme Court) to keep on justifying his approach concerning

access to justice. Kiobel was surely problematic for human rights activists and lawyers,

but it is also probably exaggerated to conclude, as John Ruggie quickly did, that “we are

not even sure anymore whether it is possible to hold companies [… accountable for]

crimes against humanity under the US Alien Tort Statute”164. It can perfectly be argued

161 Ibíd., pp. 91-92. 162 Bilchitz also note that many acts are perfectly legal and legitimate even if, sometimes, they may contradict ‘social norms’ (let’s think of gender or racial discrimination). D. BILCHITZ: “A Chasm between ‘is’ and ‘ought’? A critique of the normative foundations of the SRSG’s Framework and the Guiding Principles”, in S. DEVA and D. BILCHITZ: op. cit., pp. 107-137, passim. 163 In general terms, the debate is about the value we give to merely formal distinctions in comparison to actual behaviours and control within corporate groups. It can be argued that, in taxation law, the debate is expressed in terms of intentio iuris vs. intentio facti; the latter is the one that counts when it comes to assess the alleged illegality of tax evasion through any artificial montage. We further refer to taxation law below, at pp. 234-236. For instance, see: T. ROSEMBUJ: Minimización del impuesto y responsabilidad social corporativa, Barcelona 2009, Ed. El Fisco, pp. 365-366. We thank Dr. Enrique Sánchez de Castro Martín-Luengo for this reference. 164 INTERNATIONAL REVIEW OF THE RED CROSS: “Interview with John G. Ruggie”, in International Review of the Red Cross, Vol. 94 No. 887 (Autumn 2012), pp. 891-902, at pp. 898-899.

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that the Supreme Court left the “door open”165. Notwithstanding the in-depth

development of this issue later in this research, we have for instance the impression that

the SRSG somehow disregarded or underestimated some current and actual possibilities

to access courts, albeit imperfect and limited ones.

Further questions include, for example, the problem of companies “owned or controlled

by the State, or that receive substantial support and services from State agencies”166,

which would have an additional burden with regard to human rights. The phrasing

allows important loopholes: would it be enough a minority shareholding by the State to

create additional CSR duties in the company? The mere participation by the State is

enough or does it mean that, under the UNGPs, States are compelled to foster a

company’s CSR only if they have more than 50% of shares? What is meant by “control”

and “substantive support”?

We shall finish wondering whether a voluntary code of conduct might have any

contractual value once adopted by a TNC, given that it should be “approved at most

senior level”, affect all operations and be public and available. There are other pending

questions, minor ambiguities and imprecisions, which perhaps explain why the UNGPs

reached an unprecedented consensus in this subject. Surya Deva speaks of “consensus

rhetoric” only because of the obsession to get the guidelines adopted without a vote, by

consensus in the HRC: this author considers that John Ruggie “lightly” played with

human rights terminology (“violation becomes impact” 167) and that the UNGPs generate

confusion on eventual corporate obligations under International Law168. This is perhaps

too harsh despite the legitimate criticism on the shortfalls of the UNGPs. Is it necessary

to recall that human rights language was simply and completely absent in the corporate

world not so long ago? In fact, we feel more comfortable expressing that, though clearly

improvable, the UN initiatives made an important contribution reviving, consolidating

and exploring (if not, limitedly clarifying) CSR. As Surya Deva himself says, “existing

165 D. CASSEL: “Suing Americans for Human Rights Tort Overseas: the Supreme Court Leaves the Door Open”, in Notre Dame Law Review, Vol. 89 No. 4 (2014), pp. 1773-1812. 166 Guiding Principle 4. 167 S. DEVA: “Treating Human Rights Lightly: a critique of the consensus rhetoric and the language employed by the Guiding Principles”, in S. DEVA and D. BILCHITZ (Eds.): op. cit., pp. 78-106, at p. 96. 168 Interestingly, during Kiobel judgement, Royal Dutch Petroleum used the 2007 report of John Ruggie to allege that, under international law, there cannot be ‘direct’ obligations for corporations; whereas it is generally known that international criminal law specifies direct obligations at least against gross violations, as Ruggie himself fell compelled to clarify in an amicus brief before the US Supreme Court.

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(primarily) state-focal international institutions should be utilized for what they could

possibly deliver”169, even more so since it is an on-going process.

On balance, we consider it important to underline the positive factors of the three-level

framework and the UNGPs, above any logical criticism. The UNGPs may inspire more

questions than answers, but they provide a few fundamental answers, which have

characterised CSR thereafter: 1) the human rights based approach to CSR; 2) the

general emphasis on prevention; 3) the crucial role of States and international

institutions (they cannot elude responsibility just because it is ‘corporate-related’’); 4)

the holistic vocation (comprising any legal and policy aspects or field), and 5) the non-

negligible effort to put some order in the debate. From there on, it is impossible to

convince everyone on every aspect. As Prof. Ruggie recognised, the expiration of his

mandate was only “the end of the beginning”170.

After the UNGPs, most disapproval came from NGOs171: they considered that it

confirmed the current statu quo and the definitive abandonment of the project of a

binding instrument, since it is said that the WG that succeeded the SRSG after 2011172

does not have enough powers to go any step further173. Indeed, apart from focusing on

national action plans174 alongside its new capacity to conduct country visits175 and

169 S. DEVA: Regulating…, op. cit., p. 218. 170 J.G. RUGGIE: Just Business…, op. cit., p. 126. Also see: J.M. AMERSON: “The end of the Beginning? A comprehensive look at the UN’s Business and Human Rights Agenda from a Bystander Pespective”, in Fordham Journal of Corporate and Financial Law, Vol.17 No. 4 (2012), pp. 871-941. 171 However, this is no obstacle to widely using the UNGPs when it comes to allege violations by TNCs, and therefore showing some success of Ruggie’s work, even among NGOs. 172 The HRC established in 2011 a WG consisting of five independent experts from diverse regional backgrounds to follow-up on the UNGPs, their dissemination, implementation, further recommendations and capacity-building initiatives. As said above, the possibility of country visits is a novelty. See: HUMAN RIGHTS COUNCIL (UN): Resolution on Human Rights and transnational corporations and other business enterprises, 6 July 2011, UN Doc. A/HRC/RES/17/4, para. 6 and 7 (establishment of the WG and competencies). The WG’s mandate was extended for an additional period of three years by the HRC in July 2014: HUMAN RIGHTS COUNCIL (UN): Resolution on human rights and transnational corporations and other business enterprises, 15 July 2014, UN Doc. A/HRC/RES/26/22, para. 10. 173 R.C. BLITT: “Beyond Ruggie’s Guiding Principles on Business and Human Rights: Charting an Embracive Approach to Corporate Human Rights Compliance”, in Texas International Law Journal, Vol. 48 No. 1 (February 2012), pp. 33-62, at p. 53. 174 National implementation is one of the new priorities, compared to Ruggie’s phase, of the WG, as stated in the WG’s report to the General Assembly: GENERAL ASSEMBLY (UN): Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, 5 August 2014, UN Doc. A/69/263. 175 The WG has visited Mongolia (A/HRC/23/32/Add.1), Ghana (A/HRC/26/25/Add.5), the Republic of Azerbaijan (A/HRC/29/28/Add.1) and the USA. For example, the WG visited the USA in June 2014 (Report UN Doc. A/HRC/26/25/Add.4) and in October the same year President Obama announced that a national action plan on business and human rights would be elaborated. We take this opportunity to warmly thank Mme. Carmen Rosa Rueda, Human Rights Officer in the UN-OHCHR for her friendship

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convoke the annual forum in Geneva headquarters, it seems that there isn’t much

advancement in this field or, at least, not anymore at the same speed as between 2005

and 2011.

In the meanwhile, the Government of Ecuador and its Permanent Representation in

Geneva were particularly active in promoting binding formulas, ideally a proper treaty

on business and human rights. This brings us back to the debate between mandatory or

voluntary schemes, discussed in the following section. We note for instance that, by

virtue of Resolution 26/9 of the HRC, an open-ended intergovernmental working group

was established to work on an eventual treaty176. This intergovernmental initiative

overlaps with the independent experts of the other WG on the same issue, which might

generate tensions au-fur-et-à-mesure they start submitting parallel reports to the HRC

and the General Assembly. For the moment, the first session of the intergovernmental

working group was held in July 2015 and its potential effects are still unforeseeable. In

sum, during the first decade of the 21st Century, the UN has certainly played a central

role in reviving, consolidating and clarifying CSR, even though its leadership seems to

have recently decayed.

1.3.2 The controversial definition of CSR

Before we conclude with a definition of CSR, it is necessary to assess a few

surrounding controversies, some of which have already been mentioned, reactivated by

the UN framework and guidelines. We take as a starting point the invitation to abandon

“unduly dichotomous ways of thinking”177, together with the obvious need to resituate

CSR in the broader context of human rights. For us, the fact that this field primarily

addresses “corporate activity” and not only States, is not enough to say that CSR and

human rights are absolutely “distinct concepts”178: almost any ‘specialised’ human

and help during our internship in 2013, and for keeping us updated with press releases and news on the different sessions of the HRC. 176 HUMAN RIGHTS COUNCIL (UN): Resolution on the elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights, 14 July 2014, UN Doc. A/HRC/RES/26/9, para. 1. 177 C. SCOTT: “Translating torture into transnational tort: conceptual divides and the debate on corporate accountability for human rights harms” in C. SCOTT (Ed.): Torture as Tort, Oxford 2001, Hart Publ., pp. 45-64, at p. 45. 178 Of course, CSR and human rights, taken separately and isolate, are different concepts, but the first should be resituated within the broader context of the latter, being therefore not so different in this regard,

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rights treaty179 addresses indirectly (but quite substantively) third party activities (other

than States) and relationships between private parties, regardless of a monist or a dualist

implementation. Similarly to our approach on general human rights issues, we consider

that too clear-cut distinctions between different human rights contribute to an

undesirable legal fragmentation undermining the universality, indivisibility and

interdependency of all human rights. We therefore consider CSR an additional aspect

under the human rights umbrella. It becomes clear from this research that the separation

between CSR and the debate on “business and human rights” is precisely a biased

viewpoint180: they are not separate things and we fully support an integrated approach.

And last but not least, the oppositions between –mainly– mandatory or voluntary

initiatives, and subjects vs. objects of IL, are not insuperable.

But the very first debate is neither a legal nor an economic issue: it is political. Liberal

schools of thought are generally contrary to CSR or any related concept. Its most

relevant spokesman was Milton Friedman and his famous New York Times’ article

back in 1970. His hard-hitting remarks defined CSR as a “suicidal impulse” of some

businessmen, an improper and informal (thus unlawful) social tax. Liberal detractors

have more modern expressions181; in essence, they put forward black and white

arguments, according to which shareholders’ interests, owner’s value and profit

maximisation are the only legitimate goals of a company. Any problem would have its

origin in the fact that we are not in a perfectly free market economy.

At the source of this reasoning there are a few misunderstandings182: first of all, CSR

would have no sense in a socialist system; it has precisely consolidated in a post-cold-

war and capitalist context, giving less credibility to excessive fears in this regard.

which is a nuance forgotten by Jennifer Zerk when she seems to draw a clear-cut distinction between them. Cfr. J. ZERK: op. cit., pp. 43-44. 179 By “specialised human rights treaty” we exclude the ICCPR and the ICESCR, and we refer to all the treaties coming afterwards to tackle particular problems: racial discrimination, rights of the child, persons with disabilities, women, etc. 180 The “rather peculiar disconnect” and separation between CSR and human rights would constitute an unfocused approach to this subject, as it is apparent from previous section and will be further clarified in this section. It responds perhaps to the intention to avoid human rights based approach to corporate-related problems. For instance, refer to F. WETTSTEIN: “CSR and the Debate on Business and Human Rights: Bridging the Great Divide”, in Business Ethics Quarterly, Vol. 22 No. 4, October 2012, pp. 739-770. 181 Of course, Friedman’s discourse has to be contextualised within the framework of the Cold War. For an update of his position, see generally: E. STERNBERG: Just Business. Business Ethics in Action, Oxford 2000, Oxford University Press. 182 A detailed critique and point by point discussion of Friedman’s arguments can be found at: S. DEVA: Regulating Corporate…, op. cit., pp. 120-139.

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Moreover, it would not exist if companies always behaved perfectly and ethically and,

in some way, it benefits the market as a whole against the rapid exhaustion of resources

and in favour of the sustainability of capitalism itself –thinking of the problem in

entirely selfish terms. On another hand, the definite opposition between shareholders

and stakeholders is also quite mystifying: unless they have a bipolar syndrome or a

multiple personality disorder, the most probable scenario is where shareholders are also

stakeholders: shareholders can be persons of different religions, with disabilities,

women, members of a variety of NGOs and CSOs, etc. Besides, this “stockholders first”

discourse struggles with the multiplication of corporate scandals, frauds and the

increasingly problematic separation between owners and managers in modern TNCs.

Nor is there any absolute separation between private and public spheres nowadays183: as

it has been argued in the first section of this chapter, even International Organizations

(members-driven institutions par excellence) have accepted the necessary cooperation

between public and private actors to accomplish common objectives in relation to

human rights and development.

Finally, Friedman claims that CSR is seriously undemocratic and has to be seen as an

illegitimate and illegal shortcut to face social problems: “to attain by undemocratic

procedures what they cannot attain by democratic procedures” because “problems are

too urgent to wait on the slow course of political processes, [so] that the exercise of

social responsibility by businessmen is a quicker and surer way to solve pressing current

problems”184. This view is deeply American and finds its roots in the revolutionary

slogan ‘no taxation without representation’, which links the foundation of democracy to

taxes and the decisions on their allocation. This political argument is one of the trickiest

and most thought-provoking ones, because it alleges to be based on democratic values

that almost anyone would support.

Companies would act as unelected decision makers with regard to the allocation of

resources for social purposes. Does it mean that Friedman and his school of thought

would support a significant increase of proper taxes? We do not think so. Then, in our

view, CSR seems to be something different from mere charity: it starts to be clear that it

must have a connection with the actual activities and operations of the company. The

183 It seems naïve to deny that TNCs are, de facto, both economic and political actors. 184 M. FRIEDMAN: “The Social Responsibility of Business is to Increase Its Profits”, in The New York Times Magazine, September 13, 1970.

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word “responsibility” is, primarily, a concrete exercise related to those activities and

their impact; it is not an arbitrary social investment, unrelated to the activities of the

company (only in that case it could be said that the company is undemocratically

deciding on the prioritisation of some social purposes at the expense of other goals).

If we go one step further, philosophically speaking, we face the dialectic between

liberty and responsibility. Liberals treat these concepts, of Hayekian roots, radically and

purely. A radical, individualistic and pure understanding of “freedom” and

“responsibility” would allow wrongdoers and disregard prevention (conflicting with

liberty), with the only purpose to reinforce the ideal of “responsibility” (read:

punishment): “the freedom of action that is the condition of moral merit includes the

freedom to act wrongly: we praise or blame only when a person has the opportunity to

choose […] ”185. This does not seem acceptable to us: eventual victims would prefer a

less strong ideal of freedom and responsibility if their harm is more likely to be avoided

or prevented. In other words, this reasoning ignores the real-life tolls we have to pay

when a moral concept becomes a legal articulation, though being a difficult equilibrium.

Friedman’s only concession to regulation was his recognition of “the rules of the

game”: time goes by and these rules have changed186. Interestingly enough, leaving

aside liberal schools of thought, black and white arguments can be found against CSR

by authors who would only trust strict State regulation187, according to whom CSR

would mean to leave the vessel adrift, by divinising self-regulation. As it will be argued

throughout this research, CSR cannot be reduced to self-regulation, which is only a

restricted aspect of it.

An attempt to overcome the political controversy is the so-called “business case”

theory, which insists on the profitability of CSR for enterprises, economically speaking.

This strategy tries to convince managers and owners of adopting a CSR policy because

it is said to have a positive impact on benefits. Initially, it was a good point since it

185 F.A. HAYEK: The Constitution of Liberty, Chicago 1978, University of Chicago Press, p. 79. From Hayek thinking, we only retain, in part, the diagnostic: responsibility should ideally be a concrete and feasible aspect, somehow connected to the particular business at stake. Excessively large aspirations might distract from the real possible actions (ibid., pp. 83-84). 186 J. NOLAN: “Refining the Rules of the Game. The Corporate Responsibility to Respect Human Rights”, in Utrecht Journal of International and European Law, Vol. 30 No. 78 (2014), pp. 7-23. 187 Bakan eloquently alleges that: “No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons should be left free to govern themselves”. J. BAKAN: The Corporation, London 2004, Constable Ed., pp. 109-110.

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began to question previous assumptions and prejudices in this respect, such as the

“symbiotic relationship between repressive governance and foreign capital”188. It is

evident that companies do not necessarily and always feel at home in authoritarian or

repressive States, but “rhetoric ha[d] exceeded empirical research”189. Many authors

enthusiastically started to conduct quantitative research and generate mathematical

models to investigate eventual CSR returns on benefits190. In the banking sector, CSR is

widely seen as a “strategic value for its ability to optimize the bank quality loan

portfolio through pricing policies”191, the origin of “ethic ratings” –increasingly applied

by Ernst & Young or Standard & Poors and many other rating agencies and consultancy

firms in their daily advisory tasks and business. For better or worse, business finds its

way through.

Among other results, theories of “shared value”192 emerged to point out that CSR could

create value for both companies and stakeholders, being measurable in terms of ‘social

performance’. This leads to a merely instrumentalist or utilitarian perspective under

which it can contribute to reduce ‘business risks’ and, even, increase benefits by

creating value for both the enterprise and society. From that point of view, CSR and

human rights respect become a simple management issue of “goodwill-nomics”193:

violations would be read as risks but, sometimes, this approach can treat violations as

unavoidable costs of production, while the word ‘stakeholders’ would hide victims. This

cost-effective way of thinking has an additional problem as far as it would “allow

corporations to prioritise some human rights”194 (those more costly). All these

quantitative manias may reflect a certain “dissemination of the corporate form of

188 S.L. BLANTON and R.G. BLANTON: “What attracts foreign investors? An Examination of Human Rights and Foreign Direct Investment”, in The Journal of Politics, Vol. 69 No. 1 (February 2007), pp. 143-155, at p. 145. 189 Concerning, foreign investment, Blanton’s research would show that mathematical models refute the “dominant traditional perspective [assuming] FDI and human rights to be inherently incongruous”. Ibíd., p. 152. 190 M.F. IZZO: “Bringing theory to practice: how to extract value from corporate social responsibility”, in Journal of Global Responsibility, Vol. 5 No. 1 (2014), pp. 22-44. 191 G. BIRINDELLI, P. FERRETTI, M. INTONTI and A. IANNUZZI: “On the drivers of Corporate Social Responsibility in banks: evidence for an ethical rating model”, in Journal of Management and Governance, Vol. 19 No. 2, pp. 303-340, at p. 307. 192 M. E. PORTER and M.R. KRAMER: “Creating Shared Value: How to Reinvent Capitalism –and Unleash a Wave of Innovation and Growth”, in Harvard Business Review, Special Issue January-February 2011, pp. 63-70. 193 S. DEVA: Regulating Corporate…, op. cit., p. 139 (and ff.) 194 R. McCORQUODALE: “Pluralism, Global Law and Human Rights: Strengthening Corporate Accountability for Human Rights Violations” in Global Constitutionalism, Vol. 2 No. 2 (2013), pp. 287-315, at p. 307.

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thinking”195. CSR is only partially quantifiable, in part not to end up pricing human

rights, in so far it erroneously “mimics the logic of market transactions”196. CSR will

not always be fully profitable, nor fully damaging in economic terms. We therefore

don’t think the ‘business case’ to be the solution to the political debate; nor is it useful

to clarify the concept of CSR, its contents and essential characteristics.

In any case, as a matter of fact, the expansion of CSR seems to generate an increasingly

wide social applause and political agreement, which looks largely irreversible. CSR has

consolidated its position in the international agenda and overcome these ideological

disputes, while some legal questions arise.

Objects and subjects in International Law

Once the UN revived CSR, a parallel debate opposing subjects and objects in IL has

emerged, or perhaps re-emerged, causing rivers of ink. Is it possible for individuals and

corporations to have any kind of international legal personality? In this subject,

individuals and corporations constitute the two sides of the same coin. This is not a

neutral academic debate: its hidden purpose is to determine whether TNCs are bearers

of rights and duties under IL and to what extent.

It must be said, for instance, that IHRL would be seriously undermined if it is said to

affect exclusively the activities directly carried out by States, since they would be the

only subjects of IL. Dualist or monist, an international treaty implies the permeation of

its provisions into the internal order of the Contracting Parties and, in this sense, it

indirectly impacts third parties and private actors’ rights and duties. The dichotomy

objects vs. subjects would block the advancement of CSR, but is relatively out of date

and overtaken by reality.

195 S.E. MERRY: “Measuring the World: Indicators, Human Rights and Global Governance: with CA Comment by John M. Conley”, in Current Anthropology, Vol. 52 No. S-3 (Supplement to April 2011: Corporate Lives: New Perspectives on the Social Life of the Corporate Form, edited by D.J. PARTRIDGE, M. WELKER and R. HARDIN), pp. S-83-S-95, at p. S-83. 196 “If the corporate business case for human rights is thought to rest on maximising shareholder ‘value’ (read: profit), the monetary compensation of ‘stakeholders’ (read: victims) appears an appropriate remedy”. D. AUGENSTEIN: “The Crisis of International Human Rights Law in the Global Market Economy”, in M.K. BULTERMAN and W.J.M van GENUGTEN (Eds.): Netherlands Yearbook of International Law, No. 44 (2013), Netherlands 2014, Asser Press, pp. 41-64, at p. 53.

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More specifically, individuals have become partial legal subjects of contemporary IL,

most decisively thanks to the development of IHRL197. This is particularly evident in

some regional sub-systems where individuals can fil suits in international human rights

courts after exhausting domestic remedies. As a matter of fact, this is not only the case

with IHRL; consular law also “creates individual rights which […] may be invoked in

this Court by the national State of the detained person”, as settled by the International

Court of Justice in LaGrand198, where it was proved that the United States of America

“breached its obligations to the Federal Republic of Germany and to the LaGrand

brothers” –a violation not only towards Germany, as a State, but also towards two

German detainees who were not timely informed of their right to consular protection199.

Individuals further have legal personality in international criminal law, starting with the

use of Chapter VII of the UN Charter for the establishment of the International Criminal

Tribunal for the Former Yugoslavia (and Rwanda), later consolidated under the Rome

Statute for the International Criminal Court. Tadic was a paradigmatic case because it

definitely safeguarded the legal foundations and guarantees of such tribunals as well as

their legitimacy ratione personae and ratione materiae. An especially inspiring

sentence in Tadic states that “[i]t would be a travesty of law and betrayal of the

universal need for justice, should the concept of State sovereignty be allowed to be

raised successfully against human rights”200. In sum, individuals have rights and duties

recognised under IL, most of the time indirectly through the duties imposed on States

(and exceptionally, directly, as in international criminal law).

197 As a curiosity, the Italian doctrine has addressed the role of individuals in international law since 1950: G. SPERDUTI: L’individuo nel diritto internazionale: Contributo all’interpretazione del diritto internazionale secondo il principio dell’effettività, Milan 1950, Giuffrè Ed. The best representative of the modern Italian doctrine would be Antonio Cassese, according to whom “it would be not only consistent from the viewpoint of legal logic but also in keeping with new trends emerging in the world community to argue that the international rights in respect of those obligations accrues to all individuals”. A. CASSESE: International Law, Oxford 2005, Oxford University Press, p. 145. Also in support of this thesis: F. MASTROMARTINO: “La soggetività degli individui nel diritto internazionale”, in Diritto e questioni pubbliche, No. 10 (2010), pp. 415-437, Palermo 2011. 198 INTERNATIONAL COURT OF JUSTICE (ICJ): LaGrand (Germany v. United States of America), Judgment of 27 June 2001, I.C.J. Reports 2001, p. 466 ff., para. 77 (at p. 494) –emphasis added. 199 Ibíd., para. 128.3 (at p. 515). Moreover, the ICJ established for the first time that her previous order of 1999 including provisional measures suspending LaGrand’s sentence to death pending the final decision of the ICJ “was not a mere exhortation” but “was consequently binding in character and created a legal obligation for the United States” (para 110). However, the USA executed both brothers disregarding the order alleging that “there is substantial disagreement among jurists as to whether an ICJ order indicating provisional measures is binding” (para. 112). After LaGrand, it is considered settled case law that orders including provisional measures issued by the ICJ are binding ever since. 200 Prof. Cassese (cited supra, footnote 197) was the Presiding Judge in this seminal case. INTERNATIONAL CRIMINAL TRIBUNAL FOR FORMER YUGOSLAVIA: Prosecutor v. Dusco Tadic a/k/a “Dule”, Decision on the Defence Motion for Interlocutory Appeal on Jurisdiction, of 2 October 1995, para. 58.

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Concerning corporations, the ICJ early warned that the “corporate personality represents

a development brought about by new expanding requirements in the economic field” in

such a way that “[t]hese entities have rights and obligations peculiar to themselves”201.

In Diallo, the ICJ conferred independent legal personality to a corporation only if the

legal system of the State of nationality (or incorporation) does so and, in that case, this

amounts to “granting it rights over its own property, right which it alone is capable of

protecting”, and even “diplomatic protection” by the State of nationality against any

wrongful act of a third State202. States usually take up a corporate interest and defend it

before the WTO Appellate Body; it is far from unusual to see corporate lawyers or

representatives among the members of a State delegation in such cases203. In a more

direct way, corporations also acquire rights and duties under Treaties of Friendship,

Commerce and Navigation, Bilateral Investment Treaties and other International

Investment Agreements or international contracts between States and private actors,

legal forms that generally include dispute resolution mechanisms under the 1965

Washington Convention on the Settlement of Investment Disputes between States and

Nationals of Other States (hereinafter, ICSID Convention)204. At the same time,

enterprises have started to make their own some “human rights”, initially within the

Council of Europe in the particular fields applicable to them, such as procedural aspects

(mainly, the right to a fair trial205), right to property206, freedom of expression207 and

201 ICJ: Barcelona Traction, Light and Power Company, Limited, Judgement, I.C.J. Reports 1970, para. 39. In other words, the ICJ recognises that “international law has had to recognise corporate entity as an institution created by States in a domain essentially within their domestic jurisdiction” (para. 38). 202 “What matters, from the point of view of international law, is to determine whether or not these have a legal personality independent of their members. Conferring independent corporate personality on a company implies granting it rights over its property, rights which it alone is capable of protecting. As a result, only the State of nationality may exercise diplomatic protection on behalf of the company when its rights are injured by a wrongful act of another State. In determining whether a company possesses independent and distinct legal personality, international law looks to the rules of the relevant domestic law”. ICJ: Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo), Preliminary Objections, Judgment of 24 May 2007, I.C.J. Reports 2007, p. 582 ff., para. 61 (at p. 605). 203 On the indirect means by which TNCs participate in the WTO dispute settlement mechanism, see generally: C. MANRIQUE CARPIO: “Las empresas transnacionales en la Organización Mundial del Comercio”, in V. ABELLÁN HONRUBIA and J. BONET PÉREZ (Dirs.): La incidencia de la mundialización en la formación del Derecho internacional público: los actores no estatales. Ponencias y Estudios, pp. 177-218, at pp. 201-204. 204 P. MUCHLINSKI: “Corporations in International Law”, in Max Planck Encyclopedia of Public International Law, June 2014, para. 21 and 26-29. An auxiliary issue is the determination of the corporate nationality, on which there is no customary practice yet a no agreement between the ICJ and ICSID, since there are conflicting national systems based on corporate domicile, corporate nationality, and other factors; however, these details do not challenge the fact that corporations are recognised as partial legal subjects at the international level. 205 Cases of the European Court of Human Rights declaring a procedural human rights violation in favour of a legal entity, e.g.: Sud Fondi Srl and Others v. Italy, 20 January 2009 (violation, inter alia, of article 7 of the ECHR –no punishment without law), Sacilor-Lormines v. France, 9 November 2011 (violation of

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even the right to respect for private and family life208. The most recent and, probably,

famous case was won by the oil company Yukos against Russia, an important judgement

also because of the great deal of money involved209. The European Court of Human

Rights condemned Russia for a violation of the right to property and the right to a fair

trial210. For the moment, at a regional level (Council of Europe), it is not unreasonable

to conclude that the European Court of Human Rights has recognised an incipient

corporate locus standi on the international plane, as it undoubtedly happens with arbitral

tribunals211. It can therefore be stated that, similarly to individuals, different fields of IL

recognise, at least, a partial legal subjectivity of corporations and, again, most of the

time indirectly –because of the States’ willingness to accept it.

It goes without saying the remaining prominence of States, which are still “autonomous

subjects” while individuals could be described as “passive subjects”212, a category that

article 6.1 –right to a fair trial), Agrokompleks v. Ukraine, 6 October 2011 (same violation), Capital Bank AD v. Bulgaria, 24 November 2005 (same violation of art. 6, inter alia), Regent Company v. Ukraine, 3 April 2008 (also art. 6 inter alia), Västberga Taxi Aktiebolag and Vulic v. Sweden, 23 July 2002 (in this case related to taxes concerning a taxi company), 206 In Sud Fondi Srl v. Italy, cited above, the European Court of Human Rights also declared the violation of the right to property (article 1 of Protocol 1); other examples of violations of the right to property in favour of corporate entities at: Centro Europa Srl and Di Stefano v. Italy (7 June 2012), again Agrokompleks v. Ukraine (6 October 2011), Capital Bank AD v. Bulgaria (24 November 2005), Regent Company v. Ukraine (3 April 2008), Aon Conseil et Courtage S.A. and Christian de Clarens S.A. v. France (25 January 2007), S.A. Dangeville v. France (16 April 2002, in this case related to taxation law), Buffalo Srl in liquidation v. Italy (03 July 2004), Eko-Elda Avee v. Greece (9 March 2006, again with regard to taxes), Stran Greek Refineries and Stratis Andreadis v. Greece (9 December 1994, in this case concerning an expropriation). 207 This problem under article 10 of the ECHR usually concerns newspapers, telecom companies and media. In the following cases the company at stake wins the case because of a violation of freedom of expression: Verlagsgruppe News GmbH v. Austria (No. 1 and 2), of 14 December 2006; Axel Springer AG v. Germany, of 7 February 2012; Financial Times Ltd. And Others v. the United Kingdom, of 15 December 2009; Sanoma Uitgevers B.V. v. The Netherlands, of 14 September 2010; MGN Limited v. the United Kingdom, of 18 January 2011 (involving the famous model Naomi Campbell); and Glas Nadezhda EOOD and Anatoliy Elenkov v. Bulgaria, of 11 October 2007 (concerning a denied broadcast licence). 208 In André and Another v. France, of 24 July 2008, a lawyer and a law firm won a case in which a tax inspection was considered by the Court as disproportionate, in violation of art. 8 (respect for private and family life) jointly with the violation of article 6.1 (right of access to court). 209 The Court reserved the decision on just satisfaction, which was delayed two years and finally condemned Russia to pay up to one billion, eight hundred sixty six million, hundred and four thousand six hundred thirty six euros to the company. ECtHR: Case of OAO Neftyanaya Kompaniya Yukos v. Russia, Judgement on Just Satisfaction of 31 July 2014, Application No. 14902/04. 210 ECtHR: Case of OAO Neftyanaya Kompaniya Yukos v. Russia –Judgement on merits of 20 September 2011, Application No. 14902/04. 211 Article 25.2 of the ICSID Convention confers the locus standi to any natural or juridical person which had the nationality of a Contracting State other than the State party to the dispute, accepting in exceptional cases the same nationality if, de facto, foreign control of the company is proved. 212 K. PARLETT: The individual in the International Legal System. Continuity and Change in International Law, Cambridge 2010, Cambridge University Press, p. 357.

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might be extrapolated to the legal standing of TNCs213. These categories (autonomous

and passive subjects) could be criticised as the “reappearance of the dichotomy in

different clothes”214. Anyhow, it does not change the reality behind theorisations: States

are still the enablers of the partial legal personality of both individuals (natural persons)

and TNCs (legal persons) in the international system. At the end, indeed, this partial (or

passive) subjectivity still depends on the States’ willingness to bind themselves through

treaties and recognise it. No matter how “passive” they are, individuals are not only

right bearers, they have certain obligations as well (as seen in international criminal

law).

Of course, this evolution has its origin in the Nuremberg trials; Clapham suggests that

the development of IL will require, sooner or later, additional international duties of

individuals, in particular, civil duties “if we do not want the development of

International Law to stagnate”215. This links the problems objects vs. subjects with a

subsidiary dichotomy, i.e., rights vs. duties. At first sight, we would disagree; however,

the evolution described above in relation to international personality shows that the

price individuals have had to pay (international criminal liability for gross violations) is

rather cheap and exceptional compared to the benefits obtained (human rights). The

apparently slower (though steady) development of the international personality of

corporations might respond to the fact that they have a lot more to lose in comparison to

individuals, or at least many TNCs think so. In order to offset corporate fears of

advancing their partial legal personality, it must be recalled that, besides investment’s

protection, we have signalled that corporations already enjoy human rights protection in

the limited fields applicable to them –although this field is in its infancy, its greater

development may promote a better balance between TNCs rights and duties.

Rosalyn Higgins, former President of the ICJ between 2006 and 2009 (and first female

judge in that institution), proposed an alternative nomenclature: the term “participants”

would include “transnational corporations and natural persons –who engage in

213 “It would be difficult to understand why individuals may acquire rights and obligations under international law while the same could not occur with any international organisation, provided that it is an entity which is distinct from its members”, as it happens with TNCs. A. CLAPHAM: “The Role of the Individual in International Law”, in European Journal of International Law, Vol. 21 No. 1 (2010), pp. 25-30, at p. 30. 214 As a commentator says in a book review of the citation above: A.T. MÜLLER: “Book Review: K. Parlett, The individual in the International Legal System…”, in European Journal of International Law, 23 (2012), pp. 294-299, at p. 297. 215 A. CLAPHAM: op. cit., ibid.

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international activity”216. Higgins term was quite successful in the literature and it has

been considered a “valuable” framework to explain the increasingly prominent role of

TNCs as “instigators” and highly “influential actors”, with limited rights and, why not,

duties217. It is therefore unrealistic to state that individuals and TNCs are mere ‘objects’

of International Law and thus bypass the debate on their responsibilities. It is our

understanding that the partial legal personality of both individuals and TNCs should be

enough to facilitate and enable the “subjection of MNCs de facto sovereignty to global

regulation with regard to human rights”218. This is certainly an on-going development

but “the obstacles created by public international law are not insuperable”219.

A new treaty? Rights, duties and the current regime

As we can see, the controversies revived by the UN initial leadership have turned

around a few blocking dichotomies (objects vs. subjects, rights and duties of non-State

actors, direct or indirect obligations, mandatory or voluntary schemes220, etc.). It can all

be condensed into a simpler question: is the treaty route worthy? The question is

pending since 2003, after the failure of the UN Draft Norms, the first binding project to

place direct duties on TNCs, to provide a closed list of rights and to include

enforcement. Would it be better to reactivate that effort and work on a future treaty on

business and human rights? After all, Resolution 26/9 of the HRC created an

intergovernmental working group to start working on an eventual binding instrument. Is

the customary way not ambitious enough? To what extent the progressive interpretation

of existing instruments can be useful to improve corporate human rights respect?

Even here, Res. 26/9 is keen to “stress that the obligations and primary responsibility to

promote and protect human rights and fundamental freedoms lie with the State, and that

216 R. HIGGINS: Problems and Process: International Law and How we Use It, Oxford 1994, Oxford University Press, p. 49 (and, generally, chapter III). 217 R. McCORQUODALE: “Pluralism, Global Law and Human Rights: Strengthening Corporate Accountability for Human Rights Violations”, in Global Constitutionalism, Vol. 2 No. 2 (2013), pp. 287-315, at pp. 291-294. 218 E.F. BYRNE: “In lieu of a Sovereignty Shield, Multinational Corporations should be Responsible for the Harm they Cause”, in Journal of Business Ethics, Vol. 124 (2014), pp. 609-621, at p. 619. 219 P. MUCHLINSKI: “Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance and Regulation”, in Business Ethics Quarterly, Vol. 22 No. 1 (January 2012), pp. 145-177, at p. 154. 220 For a closer look at the problem of soft law vs. hard law, please, refer to section 3 of chapter II and section 1 of chapter IV (in relation to the EU).

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States must protect against human rights abuse within their territory and/or jurisdiction

by third parties, including transnational corporations”221. Then, what’s new compared to

the current and incipient development of indirect horizontal duties? Is it a good idea to

promote a proper treaty just to be able to allocate direct duties instead of further

developing and detailing horizontal duties indirectly, through States obligations?

In this vein, a particularly enlightening article by John Knox systematises this universe

of dichotomies. Eventual duties of private actors can be “converse duties” (“owed to the

State”, mainly obey the law, pay taxes and comply with the civil or military service) or

“correlative duties”, which are those between private actors derived from the respect of

other’s rights. Business and human rights issues correspond to “correlative duties”,

which most of the time indirectly emanate from IL and are directly provided by national

law222. Through a meticulous examination of the drafting process of the main human

rights treaties, John Knox shows that the drafters debated on the appropriateness of

listing duties, as opposed to human rights, but concluded that risks outweigh the

benefits in regard to the spirit of human rights law, to the extent States could use such

duties to limit their own commitment, but “[t]his approach did not result from the belief

that international law could place duties only on States”. On the contrary, IHRL already

comprises correlative private duties, but most of the time indirectly, through national

legislation (implementing International Law). Knox draws a pyramid of correlative

private duties to summarise this issue, which we represent below. In many ways, the

treaty route (or similar instruments) is interested in moving private duties from the

second to the third level of the pyramid below by creating direct duties; the current

system implies a gradual evolution from the first to the second level of this pyramid.

According to Knox, and we fully agree, the treaty route diverts attention from the

fundamental problem in this field: the effective implementation of human rights law,

which is not solved by just creating direct obligations. In this sense, “[p] roposals to

move such duties directly to the third level are distractions from the real need, which is

to give the [private correlative] duties greater specificity so that they might be more 221 UN Doc. A/HRC/RES/26/9, recital 7 (at p. 2). 222 John Knox further proposes a test for the suitability of -eventual- private correlative duties: they must do “no harm” (be only correlative without opening the door for converse ones, allowing the State to limit human rights arbitrarily), and “do some good” (by clarifying existing indirect duties and reinforce the current human rights regime). J.H. KNOX: “Horizontal Human Rights Law”, in The American Journal of International Law, Vol. 102 No. 1 (January 2008), pp. 1-47, at p. 2. For this author, the UN Draft Norms precisely failed at the second level: they abandon indirect correlative duties and take the ‘direct duties’ route, therefore alleviating current States’ duties –thus not improving the current system (Ibíd., pp. 37-40).

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effectively implemented domestically”223. This is, in fact, the task of the UN Working

Group of five independent experts, whose current priority is to expand national action

plans in this field while consolidating a wider practice and consensus on indirect

correlative duties upon TNCs.

Diagram No. 2: Pyramid of correlative private duties under IHRL*

* Own elaboration based on J.H. KNOX: “Horizontal Human Rights Law”, The American Journal of International Law, Vol. 102 No. 1

(January 2008), pp. 1-47, passim.

In summary, International Law can allocate rights and duties to non-State actors, such

as individuals and corporations, but most of the time indirectly, mediating the

imposition of obligations to States and their permeation into the internal legal orders.

We have cited examples in treaties and jurisprudence that show this partial legal

subjectivity and a limited locus standi of non-State actors at the international level, in a

variety of fields (IHRL, investment’s protection, diplomatic and consular law,

international criminal law). Monist or dualist, the true problem is the specification and

effectiveness of IHRL in domestic systems.

At a political level, we also agree with John Knox on several points. The negotiation of

a treaty is long, painful and uncertain. It should not be idealised. States can take

advantage of it and block some current developments of existing instruments with the

223 Ibíd., p. 45.

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diplomatic excuse that they do not want to interfere with the content and orientation of

an open negotiation. We would equally have to wait for the ratification by a number of

States for its eventual entry into force; let’s recall that the HRC’s resolution creating the

open-ended intergovernmental working group on this issue was not adopted by

consensus: a narrow vote of 20 to 14 with 13 abstentions. Furthermore, Japan, the USA

and many European countries (Austria, Czech Republic, Estonia, France, Germany,

Ireland, Italy and the UK) voted against, being the home-States of most TNCs.

The proposal of direct obligations upon non-State actors is very problematic; we risk

seeing States wash their hands in some cases alleging that it is TNCs’ responsibility, not

admitting any public responsibility, not even in vigilando. Ruggie already warned about

this risk224. Such a treaty could seriously slow down the current human rights regime

and, in the long term, be less beneficial than desired or needed. We have further

explained that most specialised human rights treaties (on racial discrimination, on

women, on persons with disabilities, on the rights of the child, on apartheid in sports,

etc.) already have, indirectly, quite significant repercussions inter privatos, in the form

of horizontal obligations through the national implementation of IL, if correctly applied.

In the field of anti-discrimination, it early became clear its horizontal vocation (besides

the obvious vertical consequences for States and public administrations), and somehow

constitutes the historic origins of indirect horizontal obligations under IHRL.

Lest we forget, important indirect horizontal effects on non-State actors are also

traceable in other fields, to name a few relevant examples: the 1992 Brussels

Convention on Civil Liability for Oil Pollution Damage225; the 1997 OECD Convention

on Combatting Bribery of Foreign Public Officials in International Business

Transactions226; the same year Kyoto Protocol to the UN Framework Convention on

224 “A government can deliberately fail to perform its duties […] in the hope that the company will yield to social pressures to promote or fulfil certain rights”, J.G. RUGGIE: Just Business…, op. cit., pp. 50-51. 225 Article III states that “the owner of a ship at the time of an incident, or where the incident consists of a series of occurrences, at the time of the first such occurrence, shall be liable for any pollution damage caused by the ship as a result of the incident”. The International Convention on Civil Liability for Oil Pollution Damage, adopted 29 November 1969 (entry into force: 19 June 1975), was replaced by this 1992 Protocol, adopted on 27 November 1992 (entry into force: 30 May 1996). 226 Interestingly, article 2 sets the “liability of legal persons for the bribery”. Though affecting for the moment foreign public officials, its article 1.1 establishes it is an offence “for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries […] for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business”. The OECD Convention on Combatting Bribery was adopted on 21

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Climate Change227; 1999 Protocol to the Basel Convention on Liability and

Compensation for Damage Resulting from Transboundary Movements of Waste and

Their Disposal (not yet into force228); the 2003 UN Convention on Corruption229; and, at

the Council of Europe, we could cite the European Convention on the Protection of the

Environment Through Criminal Law (1998, not yet into force230).

Against the problematic proposal of direct obligations, the instruments cited above

rather show the potential of indirect horizontal effects through the national

implementation of IL. We shall stress that, whilst improving and deepening indirect

horizontal obligations, some of the latter conventions have not entered into force yet

revealing the remaining difficulties to convince States. A proper treaty on business and

human rights would have to face two additional problems: whether to list rights or

duties, and upon what terms, a process that might derive into a lowest common

denominator agreement, who knows if slowing down the development of the current

human rights regime. A decision would have to be made as to whether accompany the

treaty with an additional or optional protocol to ensure the existence of an

internationally binding mechanism to supervise its compliance. Otherwise, no matter

how “hard law” it will be, at the end its practical impact could be questioned. To end

this recap, we need not forget the sluggish speed of signatures and ratifications and the

uncertainty of eventual reservations, as with any treaty.

November 1997 and entered into force on 15 February 1999. It has now 41 signatories among which all OECD Member States plus 7 non-OECD States. 227 Articles 10 and 12, inter alia, include explicit mentions to the “private sector”. The Kyoto Protocol was adopted on 11 December 1997 and entered into force on 16 February 2005. 228 With 13 signatories and 11 States Parties, this Protocol has not entered into force yet. For example, article 4 on strict liability states: “The person who notifies […] shall be liable for the damage until the disposer has taken possession of the hazardous wastes and other wastes. Thereafter, the disposer shall be liable for damage. If the State of export is the notifier or if no notification has taken place, the exporter shall be liable for damage until the disposer has taken possession of the hazardous wastes and other wastes. […] Thereafter, the disposer shall be liable for damage”. For the status of ratifications, see www.basel.int (last accessed date: 9 December 2015). 229 This represents a very prominent step forward since it includes both private-to-public and private-to-private corruption situations. Finally, article 12 contemplates “proportionate and dissuasive civil, administrative or criminal penalties”. UN Doc. A/58/422, it entered into force on 14 December 2005. It currently has 178 parties and 140 signatories. Status of ratifications at http://treaties.un.org (last accessed date 1 December 2015). 230 Article 9 provides the “corporate liability”, which “shall not exclude criminal proceedings against a natural person”, for any of the actions covered by articles 2 (intentional offences) and 3 (negligent offences”. The latter articles further establish that such offences will be translated as “criminal offences” under domestic law. This treaty has been signed by thirteen countries; only one State has ratified it (Estonia) for the time being; it has not entered into force as far as it needs at least three ratifications. See: www.coe.int (last accessed date 1 December 2015).

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We face a fluid and changing scenario. A good example is the recent Statement of H.E.

Archbishop Silvano M. Tomasi, Permanent Observer of the Holy See to the United

Nations and Specialized Agencies in Geneva, on the occasion of the 26th Session of the

HRC, when the Resolution creating the intergovernmental WG on a binding instrument

was finally adopted by a narrow vote. In this statement, he acknowledged that it is

necessary a “smart mix of regulatory and policy approaches and incentives”, to

conclude however that “only a binding instrument will be more effective in advancing

this objective”231. As the saying goes, ‘the road to hell is paved with good intentions’: of

course, a binding instrument seems prima facie the ideal solution, but only if, in the first

place, we are aware of all the traps, risks and problems behind and, at a second stage, if

we succeed in annulling those adverse side-effects.

In the face of the difficulties of the treaty route, we consider it is preferable –for the

time being– to go on developing and improving the two current open paths: the

customary practice, with gradual efforts aimed at building a solid consensus in the long

run232; and the progressive interpretation of the existing instruments, as well as their

effective implementation to ensure their indirect horizontal implications upon non-State

actors (possibilities on which we further elaborate in the following chapter). Whatever

the case may be in the future, it is evident that the “debate has now moved on –from

‘why?’ be socially responsible to ‘how?’ ” 233.

Characteristics and definition of CSR

At this point, it is important to turn back to our understanding of the word

‘responsibility’ so as to construct the differential characteristics of CSR. It does not

consist of a chivalrous exercise of generosity. Far away from generosity, the term

‘responsibility’ is closer to some kind of ‘duty’, in terms of due diligence –though

undetermined, still a legal concept. Furthermore, we defend that the word “social”,

231 As cited and commented by: V. CAMARERO SUÁREZ and F.J. ZAMORA CABOT: “Apuntes sobre la Santa Sede y el tratado de empresas y derechos humanos”, in GLOSSAE European Journal of Legal History, No. 12 (2015), pp. 183-205, at pp. 197-200. The text of the Declaration is available at: http://www.vatican.va/roman_curia/secretariat_state/2014/documents/rc-seg-st-20140611_tomasi-diritti-umani_en.html. We wish to warmly thank Prof. Zamora Cabot for this interesting reference. 232 In fact, the task of the current WG of five independent experts under the HRC’s mandate to foster national action plan is a crucial mission in widening the international practice and eventual customary practice in the future. 233 J. ZERK: op. cit., p. 25.

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while having an origin centred on the environment and labour law, now entails in

popular usage a variety of other concerns that turns it into a general human rights

appeal. In this sense, even assuming the strict views of Friedman and Sternberg, we dare

say that charity and corporate philanthropy are actually much more illegitimate (if not

unlawful) than CSR, since they really constitute ‘arbitrary generous decisions’

disconnected from the type of business, its actual operations and its inherent

‘responsibilities’.

Let us provide some examples from different economic sectors. When a hotel decides to

donate a certain amount of money for the protection of cultural heritage in its own city,

this action is certainly praiseworthy and can also be in the hotel’s business interest. A

second option would be to use more environmentally-friendly cleaning materials and to

donate money for research and development (R&D) in this field. In our view, the latter

option constitutes a “human rights based approach” with a clear connection with the

type of business and its inherent operations and responsibilities: proper CSR. However,

the first option (a donation for cultural heritage) would rather constitute an exercise of

corporate philanthropy or, put otherwise, a “charitable approach” to CSR (for us,

improper and unfocused). An educational institution (a university) may organise awards

and prizes to recognise the work of local NGOs for their social action and, at the same

time, offer free public lectures of Nobel prizes (to whom the University pays). Again, a

different possibility would consist of an integral recycling plan (office equipment in

educational institutions is one of the highest items), combined with its own programme

of scholarships for students from disadvantaged backgrounds. The difference is

interesting: in the first case, it is a relatively charitable approach, which also benefits the

public image of the university but has a rather loose connection with the impact of its

proper operations; in the second case, in our view, it is a proper CSR initiative because

the connection with the operations at stake is stronger and it also has a more solid

human rights fundament. A third example could be a law firm (or any office): a

charitable approach may provide free legal assistance to the victims of a recent natural

disaster or fraud with great media impact, whereas a human rights approach would

inspire putting in place more comprehensive work-family reconciliation measures for

employees, especially women of childbearing age and to ensure the application of the

principle ‘equal pay for equal work’, or even installing presence detectors to avoid

excessive consumption of electricity (meeting rooms, corridors, etc.) and an automatic

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mechanism to ensure that all computers are turned off at the end of the working day.

Our fourth example is a big construction company: a philanthropic initiative would be

to donate 0’5% of incomes to a local NGO to combat hunger; a proper CSR policy

would ensure that all workers benefit from social security, to improve these social

benefits together with the occupational risk prevention plan. Within the textile industry,

major designers can organise after the terrorist attacks in Paris (November 2015) a

charitable fashion show or parade; but a proper CSR policy would address the usual

problems of pollution caused by industrial inks in developing countries (down the

supply chain) or workers’ rights. There are endless possibilities and examples; we shall

finish mentioning the food industry. Following the charitable approach to CSR would

lead to contribute to a local food bank. Contrariwise, a human rights and correct

approach to CSR would prioritise other actions strictly connected to the actual impact of

the company’s operations: for example, to refine the sell-by dates in order to avoid

undue food wasting in large supermarkets, or to invest in R&D to improve the health

standards of food products (and go beyond the minimum legal requirements).

Table No. 1: Characterising CSR: charity or human rights

Examples of businesses Charitable Approach (corporate philanthropy)

Human Rights Approach (proper CSR)

Hotel (Tourist industry) Donation for the protection of cultural heritage

Environmentally-friendly cleaning materials

Educational Institutions (a University)

Awards and Prizes. Free conferences.

Recycling office equipment Scholarships

Law firm (or any office) Free legal assistance to the victims of a disaster

Family-work conciliation measures. Electricity

consumption Construction company Periodic donations to a

local NGO Improve social security of

workers and the occupational risk prevention plan

Textile industry Charitable fashion show Supply chain policies to tackle pollution and

workers’ rights Food industry Contribution to a local

food bank Address the problem of sell-by dates and health

standards

Agricultural sector

Donate excesses of

production

Use of better sanitary and

phytosanitary products (with higher environmental

and health standards)

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Both options (charitable and human rights approaches to CSR) can have a positive

impact on public image and, perhaps, economic returns for the company, but in the case

of proper CSR initiatives the difference is that it will not always and necessarily imply

an economic saving or benefit234. Both can be praiseworthy. The objective is not to

denigrate philanthropy; this is only aimed at clarifying concepts and initiatives. Each

company has its own characteristics and our reaction to different corporate policies will

vary depending on them; furthermore, the concrete activities and operations of the

company will also be essential to determine our reaction and the way we assess the

adequacy of a particular CSR initiative: “For example, should Levi Strauss fund a

campaign to end racism? Should Ford contribute to finding a cure for AIDS?”235 Of

course there might be counter-examples and cases in which the distinctions are not clear

(no disappointment: it is a typical problem in social sciences).

We propose that there are three characteristic elements of CSR, taken as categories that

represent ideal types: 1) the close connection with the type of business and its inherent

operations; 2) a sustainability criteria, i.e., to prioritise long-term effects in social or

environmental issues leaving aside circumstantial and contingent approaches; 3) a solid

vocation to respect human rights. The concurrence of all three characteristics will mark

the likelihood of being closer to a truly CSR initiative, a human-rights-based one,

annulling by the way the usual critique according to which it is only about marketing

strategies and public image smokescreens. Unlike classical monetary approaches to

CSR, which focus on profit maximisation, our approach is centred on “social

preferences”, under which there are “mixed effects on profits” and, even sometimes, an

eventual short-term reduction, within the context of stakeholders-shareholders overlaps

and interactions236.

Bearing in mind the preceding analysis, the current situation can be summarised in the

following premises: 234 “All CSR activities are not profit maximizing, [only] some may be”. M.L. BARNETT: “Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility”, in The Academy of Management Review, Vol. 32 No. 3 (July 2007), pp. 794-816, at p. 813. 235 As persuasively notes Barnett: “Consider your reaction were Union Carbide to announce a $10 million donation to community hospitals in Bhopal, India, or were Exxon to announce a $10 million donation to improve wild-life habitats along the Alaskan coast. Now consider you reaction were Ben & Jerries to do either of the above.” Ibíd., p. 794 and 808 (citations). 236 M. KITZMUELLER and J. SHIMSHACK: “Economic Perspectives on Corporate Social Responsibility”, in Journal of Economic Literature, Vol. 50 No. 1 (March 2012), pp. 51-84, at p. 59.

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a) International Human Rights Law (IHRL) has generally focused –and almost

exclusively relied– on international treaties and traditional international

mechanisms that imply vertical effects and States’ responsibilities. The

progressive and positive evolution of IHRL must be acknowledged as a gradual

and on-going development (as seen in the case of ESCR).

b) Moreover, IHRL mostly consists of ex-post strategies aimed at remediation with

recurrent difficulties in preventing eventual violations. Even when violations

have already occurred, restrictions and problems arise when breaches involve

non-State transnational actors while we face fragmented jurisdictions;

c) The complexity of TNCs’ operations and the dynamics derived from

globalisation have led to an increasing interdependency between subjects of IL

and all kind of transnational actors in the international system, so that the

Westphalian self-sufficiency of States is being questioned to protect human

rights in their especially complex interaction with TNCs;

d) When TNCs (co-)participate in human rights breaches, classic doctrines emerge

to point out that, strictly speaking, only States and International Organisations

are proper subjects of the international system, added to limited liability veils.

Contrariwise, TNCs are clearly recognised as ‘right-bearers’ when it comes to

investments protection and in other cases, suggesting at least some kind of

international personality. In parallel, IHRL has introduced a partial legal

subjectivity of individuals, now even in the area of ESCR with the entry into

force of the Optional Protocol to the ICESCR.

In view of these premises, we propose the following definition of corporate social

responsibility: a complementary strategy to increase the horizontal effects of

internationally recognised human rights, mixing hard and soft law instruments, in their

particular interaction with the activities of all kind of business enterprises, with a

predominantly preventive vocation.

The definition we propose condenses important nuances, starting with the necessary

centrality of human rights within CSR, frequently forgotten or unfocused. Then, CSR’s

predominantly preventive vocation does not prevent it from including remediation (ex

post) procedures, but we understand that it is not its most developed facet for the time

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being and, more significantly, it might also constitute one of its most interesting

contributions to the current human rights regime since traditional instruments already

focus on remediation and not so much on prevention. In other words, a predominantly

preventive approach could complete some lacunae in the field of prevention in IHRL237,

in order to increase ex-ante the actual effectiveness of human rights, provided that pre-

existing hard law mechanisms continue to develop. The objective is to improve the

actual efficacy of existing instruments, rather than looking for new binding tools. In this

connection, CSR constitutes a complementary way to reinforce the international

protection of human rights, which should neither replace nor overrule treaty-based

bodies and obligations. The mixture and interaction between hard and soft law

instruments has already been seen in the context of the UN and will further be shown

with regard to other international organisations and the EU.

In conclusion, as it will also be argued in chapter II, the increasing practice of

International Organisations in this subject suggests a growing consensus that might be a

source of new customary obligations in the long term. It is in fact the practice of States

and International Organisations (IOs) that would be the source of that eventual new

international custom (the practice of private actors cannot be regarded as a source of any

customary obligation: the expansion of CSR in the private sector is the echo of the

growing concern at the level of States and IOs). This also justifies our primary

institutional approach focused on IOs. To sum up, instead of new instruments, this

research is based on the possibilities of: 1) building a wider international practice and

consensus to push CSR potential effects among States and IOs; 2) in its interaction with

treaty law, the effective implementation and, sometimes, the progressive

interpretation238 and reinforcement239 of existing instruments.

237 Prevention is certainly a pending task of IHRL. However, ‘preventive principles’ might be deduced from the current obligations under many instruments and, up to a certain point, constitute a part of States’ duties. See, generally: B. G. RAMCHARAN: Preventive Human Rights Strategies, London – New York 2010, Routledge Ed., passim. 238 Progressive interpretation seems to be, prima facie, absent of the Vienna Convention on the Law of Treaties, which includes the textual, contextual and teleological interpretation. However, it can be argued that the progressive interpretation falls within the latter (teleological), and a good amount of jurisprudence, both at a global and at a regional level, supports this idea, even more so if quasi jurisdictional bodies or dispute settlement organs are established by the treaty. F. PASCUAL VIVES: “Consenso e interpretación evolutiva de los tratados regionales de derechos humanos”, in Revista Española de Derecho Internacional, Vol. LVI No. 2 (July – December 2014), pp. 114-153, at pp. 122-126. 239 For example, instead of creating new institutions and new instruments, a good and necessary option is the reinforcement of UN Treaty Bodies, as signalled by Prof. Cardona, Member of the Committee of the

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CHAPTER II

The role of international organisations: open windows

2.1 Bringing orderliness in the work of international organisations

At the G-7 meeting in Germany (June 2015), the world leaders’ declaration explicitly

recognised the UN leadership and the UNGPs as the most authoritative framework to

guide any effort in our subject, putting the emphasis on the expansion of national action

plans (NAPs). Mention of NAPs and this political encouragement should not go

unnoticed: in the end, it will be the greater or lesser extension of CSR at a national level

the one able to build an international practice, apart from the primary inspiration or

guidance that IOs can provide. In the second place, the G-7 also committed to foster the

implementation of the OECD Guidelines and their correspondent National Contact

Points (NCPs); the leaders “will ensure that our own NCPs are effective and lead by

example”240. From this statement, of political value, we infer the increasing importance

of this subject and how it has managed to emerge as a permanent item on the agenda, as

said elsewhere in this work. We also deduce the unforgettable importance of States’

practice as a source of international norms and, apart from the UN, other international

organisations have participated in the common effort to convince States to act in this

subject matter.

2.1.1. Common aspects and institutional coordination of international standards

The prominence of the UN is, in reality, relatively recent taking into account that both

the OECD and the ILO have CSR-related initiatives in the 1970s. The UN has certainly

leaded the way, very significantly since the beginning of the 21st Century, but other

international organisations have made non-negligible efforts to promote CSR. The

Rights of the Child: J. CARDONA: “Los mecanismos institucionales para la protección de los derechos humanos como interés público global: el fortalecimiento del sistema de órganos de tratados de Naciones Unidas”, in N. BOUZA, C. GARCÍA and A.J. RODRIGO (Dirs.): La gobernanza del interés público global, XXV Jornadas de la Asociación Española de Profesores de Derecho Internacional y Relaciones Internacionales (Barcelona, 19-20 September 2013), Madrid 2015, Tecnos Ed., pp. 429-466, passim. 240 G7: Leaders’ Declaration, G7 Summit, Germany, 7-8 June 2015, p. 7.

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proliferation of instruments from different sources might have both positive and

negative effects. The outcome will depend on the degree of coordination and

consistency: the latter being a substantive issue impossible to achieve without the first,

we address first the institutional coordination. Coordination and consistency would

generate together a desirable convergence, in the words of John Ruggie:

“Convergence is desirable for two reasons. First, reducing the number of competing standards provides greater clarity and predictability for businesses and other stakeholders alike. Thus, it produces larger scale change and change that is more cumulative in its effects over time. Second, other major standard-setting bodies active in this domain have implementation capacities the UN lacks”.241

The variety of proposals coming from different IOs certainly poses problems of

coherence. For example, we still find a number of global initiatives insisting on the so-

called ‘business case’, according to which CSR is expected to generate economic

returns. The OECD seems reluctant to definitely abandon the ‘business case’ approach

(CSR is seen as “both a business responsibility and a business opportunity”242), yet we

have explained that CSR will not always have a positive impact on benefits. Where the

‘business case’ is more visible is in the International Organisation for Standardisation

(ISO), a non-governmental institution composed of private national standard-setting

associations. Among other motivations to buy the social responsibility standard of the

ISO (ISO 26000, at the price of 198 Swiss francs for a 106-pages’ document), we find

the possibility of gaining “competitive advantage, reputation, the ability to attract and

retain workers or members, customers, clients and users, the maintenance of employee

morale, commitment and productivity, [and] the perception of investors”243. In this line,

ISO 26000 leaves room for managerial discretion in relation to ‘due diligence’, which is

built on the basis of societal expectations and avoiding legal constructions, somehow

more linked to sustainable development rather than to proper human rights concerns244.

Of course, the ‘business case’ component, residually present in the OECD Guidelines

and strongly embedded in ISO 26000, is far away from our approach to CSR. However,

the OECD has recently aligned itself with the UN. Prof. Ruggie himself was invited to

participate in the meetings previous to 2011’ update of the Guidelines, with a view to

241 J. RUGGIE: Just Business…, op. cit., pp. 159-160. 242 OECD: Guidelines for Multinational Enterprises, Paris 2011, OECD Publishing, p. 44. 243 ISO: Discovering ISO 26000, 2014, available at www.iso.org. 244 A. JOHNSTON: “ISO 26000: Guiding Companies to Sustainability through Social Responsibility?”, in European Company Law, Vol. 9 No. 2 (2012), pp. 110-117, at pp. 114-116.

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coordinating discourses. In the current stage, coherence and consistency of global

initiatives start to be indispensable for the future success of CSR.

To start with, we wish to underline that, despite dispersion, the work of IOs –other than

the UN– actually confirms the definition of CSR that we propose. Even ISO 26000,

with all its limitations, has a strong point: its focus on prevention, which is essential in

our understanding of CSR. And both the OECD Guidelines and ISO 26000, though very

different, incorporate the necessary centrality of human rights as we propose. More in

detail, the latest version of the OECD Guidelines for Multinational Enterprises (2011)

includes a new chapter (No. IV), only on human rights, absent in the previous versions,

which strictly follows the language and contents of the UNGPs: it highlights that the

primary responsibility lies on States, that companies have to respect that framework,

prevent and avoid adverse human rights impacts and “provide for or co-operate through

legitimate processes in the[ir] remediation”245, thus implicitly including judicial and

non-judicial grievance mechanisms.

As far back as 2008 –before Ruggie’s work–, an unofficial ILO publication already

stressed that CSR “should not be defined as only ‘beyond the Law’”, because it also

includes “minimum regulatory standards” with a human rights approach246. Compliance

with the existing legislation is seen as a baseline; only a portion of CSR consists of

going “beyond the law”. Again, our definition also states that CSR mixes both hard and

soft law, mandatory and voluntary components, as summarised in the following

diagram:

Diagram No. 3: Legal composition of CSR

245 OECD Guidelines… (2011), p. 31. 246 INTERNATIONAL INSTITUTE FOR LABOUR STUDIES / ILO: “Governance, International Law and Corporate Social Responsibility”, Research Series No. 116 (2008), pp. 107-113.

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Finally, the OECD, the ILO and the ISO texts put the accent on risk assessments of

adverse human rights impacts, confirming again what we defined as a “predominantly

preventive vocation” of CSR. Unfortunately, none of the initiatives of IOs at a global

level –not even the UN’s– can be said to be complete and fully satisfactory. Each

definition incorporates some good points and presents some loopholes, a phenomenon

that is perfectly understandable given the dispersion and disconnection of the diverse

instruments at their source. Nevertheless, the fact of having found in the work of these

organisations the diverse elements of our definition of CSR gives cause for some

optimism (the human rights centrality, the predominantly preventive vocation and the

mixture of hard and soft law). This indicates that the work of IOs at a global level seems

to follow a similar direction. Undoubtedly, there is still pending work to systematise the

overlapping initiatives from different international organisations, for which the

institutional coordination is a prerequisite to deal with the almost infinite spheres of

interaction between business and human rights.

Also in this regard, we start to detect some progress in the form of policy transfers

between IOs. In our view, both revisions of the OECD Guidelines are partly a response

to the UN’s impulse of the global CSR agenda: the OECD Council revised the

Guidelines in 2000 and created the National Contact Points (NCPs), with non-judicial

grievance competencies, precisely when the Draft UN Norms had caused a vivid debate

and revitalised CSR. And the following update of the Guidelines (2011) incorporated

the above-cited new chapter on human rights. The establishment of the NCPs is

obligatory for those countries adhered to the Guidelines (45 States at the time of

writing247); the weak point is that most of them are established within a department of

the Ministries of the Economy and their independence and usefulness is constantly

under question, problems which are behind the amending purpose expressed by the G-

7248. It goes without saying that the OECD Guidelines constitute a soft-law instrument,

a set of recommendations by governments to companies, the effectiveness of which can

generate an endless debate. In the overall, we totally agree with Johnston’s assessment:

“Initially skeptic about the effectiveness of soft law, I quickly became an advocate after my arrival as Secretary General of the OECD. When an attempt to adopt a multilateral agreement on investment (MAI) foundered in 1998 […],

247 The official website is https://mneguidelines.oecd.org/ncps/ (last accessed date: 10 December 2015). 248 Further reference to the NCPs is made, in the context of the EU, at pp. 194-195. We propose there that the NCPs could be more wisely placed within the correspondent national human rights institution.

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it became clear that proposed conventions and treaties are not only targets for dissident groups, they also take years to negotiate and implement […]. At the same time, it would be naïve to think that a meaningful system of global norms could exist without binding regulation and formal deterrence. […] Future international regulation in some areas could emerge from gradual convergence and coordination of national practices. […] I would caution, however, against exaggerating the degree to which formal law enforcement can or should solve all the world’s problems. Soft law, as through the Guidelines, has an increasingly important role to play”.249

By the same token, one should ask ‘treaty advocates’ if the current 189 ILO

Conventions have proved to be the best way to promote labour rights. Of course, this

was somehow an expectable development given that labour relations have a stronger

historical inclination to hard norms (at least outside the US). This historical inclination

of labour relations to hard law has also a sound reason behind: the balancing of

employer’s power with the generally less power of workers, giving rise to principles

such as “in dubio pro operario” (similarly to the adagio ‘in dubio pro reo’ of criminal

law).

Notwithstanding this, the ILO is no stranger to soft law and CSR. The ILO has

produced two basic texts: the Tripartite Declaration on MNEs and Social Policy (1977)

and the Declaration on Fundamental Principles and Rights at Work (1998). As we have

said, CSR is a mix of hard and soft law (the ILO early pointed in that direction), so

these guidelines and recommendations need to be read jointly with the eight ‘core’ ILO

Conventions250. In fact, both declarations have the underlying objective of coordinating

diverse ILO conventions to foster their joint CSR-effect through soft-law guidance.

Besides, the International Labour Conference also approved the Annex of 1998’

Declaration on Fundamental Principles and Rights at Work, which establishes a unique

follow-up mechanism in a soft norm. The follow-up looks forward to promoting the

ratification of the eight fundamental Conventions, via State-by-State annual reports and

a global report, both reviewed by the Governing Body, so as to facilitate technical

cooperation and the gradual achievement of concrete goals. On their side, the successive

249 D. J. JOHNSTON: “Promoting Corporate Responsibility: the OECD Guidelines for Multinational Enterprises”, in R. MULLERAT: Corporate social responsibility: the Corporate Governance of the 21st Century, The Netherlands 2011, Wolters-Kluwer, pp. 275-284, at pp. 278-279. 250 In chronological order: the Forced Labour Convention (No. 29 -1930), the Freedom of Association and Protection of the Rights to Organise Convention (No. 87 -1948), the Right to Organise and Collective Bargaining Convention (No. 98 -1949), the Equal Remuneration Convention (No. 100 -1951), the Abolition of Forced Labour Convention (No. 105 -1957), the Discrimination (Employment and Occupation) Convention (No. 111 -1958), the Minimum Age Convention (No. 138 -1973) and the Worst Forms of Child Labour Convention (No. 182 -1999).

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revisions of the Tripartite Declaration on MNEs and Social Policy have included

mentions to the UN Global Compact and the MDGs and confirm that, from the point of

view of the ILO, recommendations are addressed also to “governments”, alongside

companies, workers and employers, unlike the OECD Guidelines, which are

recommendations to companies by member-States. In this line, the ILO states that these

objectives “will be furthered by appropriate laws and policies”251, anchored in “basic

human rights”252, therefore combining mandatory and voluntary schemes together with

legalist and political strategies. The Declaration on MNEs was completed in 1986 with

a dispute resolution mechanism on its interpretation253, which can be activated by any of

the three constituents – the intrinsic originality of the ILO in the international system.

Policy transfers may seem relatively evident between the UN and the ILO (an UN

Agency) and the OECD, cross-citing each other standards. A similar cross-fertilisation

can be studied in the particular case of the ISO 26000. We mentioned earlier that this

(private) standard had a more developmental and business-friendly approach, rather

than a proper human rights one. Though being business-oriented, ISO 26000 has a

positive aspect: unlike other famous ISO standards, it is not certifiable and thus reduces

the risks of creating a new “certification circus” related to CSR; in other words, it

remarkably reflected the “lack of desire to create another product for the

auditing/certification industry”254. ISO 26000 developmental approach can also be seen

as a positive aspect, in terms of an “inter-marriage” between CSR and the MDGs255, in

line with the UN strategy, which actually links human rights to development. In fact,

this tendency to unite human rights and development has been confirmed by the new

Sustainable Development Goals or 2030-agenda256, which continues to include many

ESCR such as health, education, the environment, food and adequate housing.

251 ILO: Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, revised version adopted by the Governing Body of the International Labour Office at its 295th Session, March 2006, art. 3. A fourth edition (not revised) was issued 29 August 2014 without changes by the Governing Body. 252 Ibíd., art. 1. 253 This is a task for the ILO Committee on Multinational Enterprises. It excludes overlapping with other ILO procedures of review of national law and practice, other Conventions and Recommendations or matters under the freedom of association procedure 254 The standard cited as by A. JOHNSTON: op. cit., at p. 112. 255 D. KATAMBA, C.M. NKIKO, C. TUSHABOMWE KAZOOBA, I. KEMEZA, S. BABIIHA MPISI: “Community Involvement and development: An inter-marriage of ISO 26000 and millennium development goals”, in International Journal of Social Economics, Vol. 41 No. 9, pp. 837-861. 256 UN Doc. A/RES/70/1, adopted 21 October 2015.

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Finally, although we see a de facto institutional coordination through policy transfers,

many of which start to be openly deliberate, we find sometimes more formal

cooperation agreements between organisations. Suffice it to cite the interesting

Memorandum of Understanding between the OECD and ISO in the area of social

responsibility, signed in 2008 to ensure that “ISO International Standard […] and ISO

activities relating thereto are consistent with and complement the OECD Guidelines”257,

through a mutual and timely communication, consultations, assistance and co-operation.

Consistency and complementarity are difficult to balance; but anyone would agree that

the express intention to do so is a must irrespective of the final result. We are already

used to inter-agency initiatives on particular matters and to see officers attending

meetings at the headquarters of other organisations depending on the subject, but this

MoU consists of going a step further: an institutionalisation of coordination that may

hopefully inspire similar institutional agreements in the future, perhaps in order to

include all relevant IOs in the area of CSR.

2.1.2. The challenge of substantive coordination

We have shown in the previous section that our definition of CSR finds support in the

work of IOs at a global level. We have also highlighted the common aspects of diverse

standards as a result of policy transfers between IOs and an increasing, though still

imperfect, institutional coordination. The next step should consist of promoting a joint-

reading of all these standards given the fact that there are overlapping initiatives

addressing the same issues from different perspectives.

Indeed, more and more IOs incorporate human rights concerns or related issues into

their daily activities, regardless of their founding priorities. Our objective now is to

show some sector-specific opportunities for coordination with substantive outcomes.

The following examples, in a non-exhaustive way, would merit a longer, in-depth and

distinct research; but our goal is just to suggest there are also substantive interactions

and opportunities for convergence of social responsibility standards and related

instruments.

257 Emphasis added. OECD – ISO: Memorandum of Understanding between the OECD and ISO in the Area of Social Responsibility, 5 May 2008, article 1.1.

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Within IHRL, environmental protection has always been the spearhead of a regulatory

evolution that has brought about improvements that start to be extended to other areas.

For example, environmental footprints are widely used by the industry and the fact of

being a quite easily quantifiable factor (including a strong ‘business case’) has

decisively helped environmental standards on their path to a prompt success.

International Environmental Law is a quite recent evolution within the history of IL, an

area in which we also find a good amount of soft norms258 but more and more binding

treaties, whose effectiveness in turn is discussable. We have already cited the 1992

Brussels Convention on Civil Liability for Oil Pollution Damage, the Kyoto Protocol to

the UN Framework Convention on Climate Change259. The level of specificity of these

treaties is also remarkable: suffice the additional examples of the International

Convention for the Conservation of Atlantic Tuna or the Convention for the

Conservation of Antarctic Seals, for the concreteness of their subject-matter and their

repercussion on private actors, and the Aarhus Convention on Access to Information,

Public Participation in Decision-making and Access to Justice in Environmental

Matters, for its procedural importance –an extraordinary formalisation of ‘procedural

human rights’. Two international environmental treaties await a sufficient number of

ratifications to enter into force: the 1999 Protocol to the Basel Convention on Liability

and Compensation for Damage Resulting from Transboundary Movements of Waste

and Their Disposal as well as the European Convention on the Protection of the

Environment through Criminal Law (1998). Moving to policies, environmental

objectives mainstream all UN agencies, as confirmed by the new Sustainable

Development agenda for 2030; even WIPO has jumped on the environmental wagon

and has developed an internet-based marketplace to facilitate intellectual property

services and databases for green technologies, which is by the way a good example of

PPPs.

For instance, the situation can be interpreted in terms of a progressive hardening of

previous environmental expectations, a process accelerated since the late 1980s.

Because of its early development, environmental protection has blazed a trail and has 258 A recent state of the art with examples and case studies at: J. FRIEDRICH: International Environmental ‘Soft Law’. The functions and Limits of Nonbinding Instruments in International Environmental Governance and Law, Max Planck Institute 2013, Springer Ed., passim. 259 On 12 December 2015, the 21st yearly session of the Conference of the Parties to the UNFCCC, and 11th session of the Meeting of the Parties to the Kyoto Protocol, adopted by consensus the Paris Agreement, updating the goals for the reduction of greenhouse gas emissions and limit the global warming to 2 Celsius degrees between 2030 and 2050 (compared to preindustrial values).

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always been one step ahead developing and intermixing hard and soft law instruments.

This evolution of environmental regulation has contributed to three achievements: 1) the

gradual inclusion of procedural aspects to operationalise simultaneous goals; 2) the

progressive hardening of previous soft-law aspects; 3) the coordination efforts by a

variety of IOs (both institutionally and substantially).

We observe similar improvements in the area of the right to food and agricultural

production. A highly topical human rights problem is food security while speculation in

the stock markets is said to be related to several food crises in Africa, in particular due

to the spectacular escalation of the price of corn after 2008’ crisis. The area of the right

to food and agriculture is also in advance in terms of international coordination,

including CSR instruments to tackle the current defies. Already in 2004, FAO issued the

Voluntary Guidelines to support the progressive realization of the right to adequate

food260, which take a transversal human rights-based approach, from good governance

to specific ESCR, like water and sanitation, food security and labour rights.

This path finally led to an unprecedented institutional and substantive co-operation: the

principles framework for responsible agricultural investments, adopted in 2009 by an

interagency working-group composed of FAO, IFAD, UNCTAD and WB, a strong call

for a global consensus. According to these principles, investments should not

“jeopardize food security” (principle 2) but respect the environment (principle 7) and

“existing rights to land” (principle 1)261. FAO has produced two additional guidelines:

in 2012, the Voluntary Guidelines on the responsible governance of tenure of land,

fisheries and forests262 and, in 2014, the Principles for Responsible Investment in

Agriculture and Food Systems263. We could also add FAO’s Code of Conduct for

Responsible Fisheries and the International Code of Conduct on the Distribution and

Use of Pesticides, more clearly calling upon companies, apart from the usual regulatory

responsibility of States. In summary, the current polemic turns around large scale land

acquisitions (“land grabbing”) and the respect of the environment to ensure a

sustainable agriculture.

260 Adopted by the 127th Session of FAO Council, November 2004. 261 FAO – IFAD – UNCTAD – WB: Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources (Extended version), 25 January 2010. 262 Adopted by the Committee on World Food Security (FAO), 38th Special Session, 11 May 2012. 263 Adopted by the Committee on World Food Security (FAO), 41st Session, 15 October 2014.

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In today’s economy, the ever-growing complexity of supply chains is not limited to the

industrial sector and widely affects food products, which has marked a new priority in

this subject. The OECD and FAO are currently working on a joint voluntary Guidance

for Responsible Agricultural Supply Chains264, therefore continuing their coordination,

at an institutional level but also on the substance. The most recent example is the joint

FAO-UNIDROIT Legal Guide on Contract Farming, where specific human rights

concerns are straightforwardly addressed: it directly cites the UNGPs as a source of

inspiration265 and recognises the intertwining of technical standards with several human

rights, on which it assumes their interdependency266. This Legal Guide even states that

Companies should respect human rights regardless of the local enforcement deficits at

the government level, including procedural aspects like “participation, accountability,

empowerment, non-discrimination, transparency, human dignity and the rule of law”267.

In this context of guidelines and codes, public goods and concerns are more likely to be

introduced into private (contractual) relationships through certificates and standards that

promote it268.

All these instruments urgently need a joint reading, to be added to the numerous reports

of the UN Special Rapporteur on the Right to Food and the UNGPs, to cite the

framework within which it should be interpreted; only such an approach will help

moving from institutional coordination to substantive results. In this regard, it must be

ensured that the development of guidelines and soft norms allows a sector-by-sector

substantive operationalisation of CSR –as seen in the case of agriculture and food.

However, at the same time, the multiplication of standards should not undermine the

need for harmonisation (what we termed “coordination and consistency”). In any case,

even though so many people die of hunger every day, the right to food and agribusiness

264 The draft text and the agenda for negotiations are available at: http://www.oecd.org/daf/inv/investment-policy/rbc-agriculture-supply-chains.htm (last accessed date: 29 December 2015). 265 UNIDROIT – FAO – IFAD: Legal Guide on Contract Farming, Rome 2015, para. 34 (at p. 12). 266 “Emcompassing civil and political rights, as well as economic, social and cultural rights (such as the right to food, the right to health, the right to social security and the right to work)”. Ibíd., para. 41 (at p. 31). 267 Ibíd., para. 58 (at pp. 36-27). 268 F. CAFAGGI and P. IAMICELI: “Supply chains, contractual governance and certification regimes”, in European Journal of Law and Economics, Vol. 37 No. 1 (February 2014), pp. 131-173, at p. 170.

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are a good example to demonstrate that “convergence among CSR standards and

guidelines is in progress”269.

Finally, in a totally different area that allows us to introduce the following section on

trade and investments, besides the specialised work of the WB and the ICSID, or the

WTO, we should have a look at other instruments and proposals from other

organisations. In a particularly interesting and recent report, Mr. Alfred de Zayas, UN

Independent Expert on the promotion of a democratic and equitable international order,

has proposed to the General Assembly to request an Advisory Opinion from the ICJ on

the priority of the Charter of the United Nations and the United Nations human rights

conventions over other treaties –in particular, investment and trade arrangements270. In

this research, we basically follow the same approach as his report, based on article 103

of the UN Charter, article 38 of the Statute of the ICJ and the Vienna Convention on the

Law of Treaties, in order to conclude on the duty to make compatible human rights and

UN obligations with other concurring international obligations271.

However, the Independent Expert adopts a far more radical stance, compared to ours,

inasmuch he even promotes a categorical abolition of investor-State dispute settlements.

In our case, as it will be further developed in the following section, we adopt a more

nuanced and pragmatic approach to show that there is room for improvement and that

there are open windows to gradually mainstream human rights respect in trade and

investment disputes. Regardless of our differences of opinion with the Independent

Expert, we certainly support the idea that an emerging international practice reveals an

increasing consensus on the fact that human rights entail some transversal principles

that can also affect international economic law.

The practice surveyed so far indicates that IOs and many States seem to go in that

direction (mainstreaming human rights into any area), but it would be more delicate to

precisely select what human rights and principles have really evolved, or can finally

269 K. POETZ, R. HAAS and M. BALZAROVA: “CSR schemes in agribusiness: opening the black box”, in British Food Journal, Vol. 115 No. 1 (2013), pp. 47-74, at p. 58. 270 UN (General Assembly): Report of the Independent Expert on the promotion of a democratic and equitable international order, 5 August 2015, UN Doc. A/70/285. We wish to thank the Independent Expert for his kind invitation to various events during our internship in the UN (2013). 271 This means a joint reading of international obligations acknowledging the relational character of international law. We should not risk proposing a clear hierarchy, as explained elsewhere in this work (see the precedent section).

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crystallise, into customary obligations272. Such obligations would have to be based on a

consistent and generalised opinio iuris and praxis at the end of the journey. However,

we rather think that, if such a customary rule of respect for human rights has emerged, it

is more likely to affect only some selected principles on which we have scarce certainty,

and probably not all human rights –therefore not being very useful in the far richer area

of ‘business and human rights’. We essentially argue that, at this stage, it is rather

inadvisable to request an opinion from the ICJ –we further risk an ambiguous and

unhelpful answer, which is capable of blocking or slowing down the customary path

already initiated.

2.2 CSR and international trade and investments

As we have seen so far, when dealing with transnational companies’ respect for human

rights we need an interdisciplinary perspective –procedural law, commercial and labour

law, civil law, public and private international law…- to cover legal relations that go

beyond a single legal order or jurisdictional system. We are, therefore, projected to

almost any kind of legal relationship.

This is also why we need to analyse all actors, from States to private companies and

international organisations, trade unions and consumers and almost any civil society

organisation. We know globalisation mainly affects international trade and investments

but, in the last decades, international transactions and external investments have

significantly increased and, among other reasons, we might underline two:

1) Both the WTO and the World Bank (WB273), together with financial

institutions at a regional level and the private banking sector, finance a great

part of these investments;

272 In a different report, the above-cited Independent Expert even says it would extend to all human rights, including ILO and WHO Conventions. For this report see: HUMAN RIGHTS COUNCIL (UN): Report of the Independent Expert on the promotion of a democratic and equitable international order Alfred-Maurice de Zayas, 14 July 2015, UN Doc. A/HRC/30/44. 273 Please, note that the expression World Bank comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The expression “World Bank Group” refers to three additional institutions, besides the IBRD and IDA: the International Finance Corporation (hereinafter IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). All are technically considered UN institutions. They were the result of the Bretton Woods negotiations (1945), when the IMF was also

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2) States protect foreign investors through three types of legal forms: bilateral

treaties (BITs), multilateral investment agreements (MIAs) and, more

simply, through international contracts between the State and concessionary

companies. In this way, governments protect those who directly or indirectly

finance projects, facilitating access to means of dispute settlement outside

the State’s jurisdiction.

As repeated elsewhere in this research, it is our understanding that, if there is any part of

the legal order that could be made relevant for all sectors and branches of law, this is the

case of international human rights law and its principles or, at least, core human rights’

principles that have penetrated into customary international law. In this vein, we should

emphasise again that we are mainly speaking of States’ obligations and their

responsibility of surveillance, also when it comes to private activities at the international

level. Even if States weren’t to have ratified specific human rights instruments, such as

the ICESCR, we need to recall some general obligations with regard to article 1 of the

UN Charter and the Vienna Convention on the Law of Treaties, which foresees the

resolution of international controversies “by peaceful means and in conformity with the

principles of justice and international law” (preamble) and “in good faith” (art. 31), in

conformity with “human rights and fundamental freedoms for all” (preamble). We can

obviously discuss the different degrees of compliance and standards, but it is recognised

a high degree of consensus on the essential or core human rights principles, which can

therefore be considered customary obligations regardless of the ratification of a specific

treaty274.

A widespread practice indicates that there are not watertight compartments in

International Law. To quote just one example, the ICJ settled in a very simple way that

“ [a] n international instrument has to be interpreted and applied within the framework of

the entire legal system prevailing at the time of the interpretation”275. It is precisely for

this reason that we find “general exception clauses”, “public interest clauses” in the

WTO agreements as well as recurrent references to general international law in some

created, in this case as a fully separate organisation, focused on monetary cooperation, development and balance of payments difficulties. 274 But only very few human rights would have reached that status, being useless taking into account the casuistry of ‘business and human rights’ issues. Of course, in some cases we may face erga omnes obligations: for example, if contemporary forms of slavery are detected, or racial segregation, States could adopt any measure against the transnational corporation eventually involved (from breaking contracts to any other enforcement mechanism). 275 ICJ: Advisory Opinion on Namibia, ICJ Reports 1971, para. 53 (at p. 31).

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interesting arbitral decisions. Ernst-Ulrich Petersmann, one of the most authoritative

scholars in this field, has repeatedly warned of the dangers of so-called ‘self-contained

regimes’ such as investment law in relation to public international law. We need

coordination and an integrated approach to diverse international legal fields in order to

tackle legal fragmentation, which is the reason “why international economic law fail[s]

to protect global public goods”, not being irreconcilable with the due “respect for the

legitimate diversity [and specificity] of international legal regimes”276 –we fully support

Petersmann’s diagnostic277.

We suggest below that there are practical examples, in which human rights have found

their way into trade and investments issues, although timidly. Nothing impedes this

practice from being extended and developed in the future; for instance, it is only a

question of progressive development of the current instruments, bearing in mind the

usefulness of referring to general international law as the only legal and legitimate

method to make compatible the increasing transnational economic activities with human

rights obligations. IOs role in regulating trade and investments shows a wider

acknowledgement of the ‘relational character’ of IL and the transversal effects of human

rights.

2.2.1 International investments and human rights

First of all, we propose that international organisations that finance foreign investments

have, at least, an institutional and procedural role to play to protect human rights, even

if their first legitimate objective might be the protection of their natural founding

priority.

The right to life and the right to health are prominent obligations of States under the rule

of law and this necessarily implies the right to drinking water. According to our analysis 276 E.U. PETERSMANN: “Why Does International Economic Law Fail to Protect ‘Global Public Goods’”, in A. LIGUSTRO and G. SACERDOTI (a cura di): Problemi e tendenze del diritto internazionale dell’economia, Liber Amicorun in onore di Paolo Picone, Napoli 2011, Ed. Scientifica, pp. 111-125, at p. 115. This thesis is further developed in E.U. PETERSMANN: International Economic Law in the 21st Century, Oxford 2011, Oxford University Press. 277 However, we disagree with the solution: Petersmann proposes a multilevel constitutional approach to international law; such a constitutionalist attitude towards IL forgets, in essence, that internal legal orders based on a variety of constitutional theories, are unfortunately quite far from being efficient providers of “global public goods”. In many occasions, pressure for improvement precisely comes from International Law itself.

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of the ICESCR (1966), no provision establishes that it has to be a free and public

service, but drinking water needs to be made accessible and fully available regardless of

its private or public management278. But economic and social rights usually require big

initial investments, where the conflicting interests can be large and complex.

Many investment contracts actually deal with basic public services (water, power, oil

and gas, telecommunications, transport and waste disposal), which are narrowly linked

to the enjoyment of economic, social and cultural rights. In many occasions, an

international investment contract constitutes the first step before the enjoyment of any

economic and social right in a developing country. Very frequent problems come up

also with private security services and its related aspects, touching on civil and political

rights. Sometimes tragically, we witness regular violations of the right to life and public

security or freedom of expression. The rights of indigenous peoples are, finally, another

recurrent problem in the operations of transnational companies, because of the remote

location of many natural resources.

Prevention measures could be put in place to avoid or reduce the potential negative

effects on the host community, most of the times involving the following problems: the

right to health, labour rights, forced evictions, the protection of cultural heritage and the

environment, each of them including important procedural dimensions (information,

consultation and public participation, access to justice plus effective and timely legal

protection279).

In a famous example, a gas pipeline through Chad and Cameroon led to a threat to

human rights in both Central African countries280. Amnesty International warned that

this threat was more likely to materialise if the investment agreement forgets, omits or

clearly hampers State’s international obligations in terms of human rights and the

management responsibility of concessionary companies. A consortium of companies

was extracting gas of the fields of Doba (southern Chad) to cross Cameroon with a

thousand kilometres pipeline to the Atlantic. It consisted of the biggest private

278 OHCHR: Frequently Asked Questions on Economic, Social and Cultural Rights, Fact Sheet No. 33, Geneva 2008, United Nations, p. 20. 279 Called “procedural human rights”, which started their consolidation in cases touching on the environment, a recurrent problem for TNC’s. 280

A good analysis of the case: A. Al FARUQUE: “Relationship between investment contracts and human rights: a developing countries’ perspective”, in Ph. SANDS, S. BHUIYAN and N. SCHRIJVER (Eds): International Law and Developing Countries. Essays in honour of Kamal Hossain, Leiden-Boston 2014, Brill-Nijhof, pp. 240-243.

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investment in Africa at that time and the consortium was composed of Exxon Movil and

Chevron, both American companies, and Petronas, the gas State company of Malaysia.

As it is often the case, this project was promoted by a number of investors, accepted by

the concerned governments, supported with World Bank loans, private export credit

companies and banks, some of which had already and voluntarily adopted social and

environmental standards. The project was deeply criticised as an invitation for Chad and

Cameroon to ignore their international obligations in terms of human rights. Particular

clauses allegedly prevented these countries from adopting measures that might disturb

the future of the project, even when such measures were meant to address a human

rights’ demand281. This possibility should be excluded of any agreement: as said before,

no international contract has its own life in a vacuum; it only exists in an international

legal context.

As for this particular case, in 2001 the President of Chad ordered that the head of

opposition be arrested and tortured because he was against the creation of the gas

pipeline. Even though it was one of the biggest investments foreseen in Africa, the

project linked a consortium of big oil companies and was financed by the World Bank.

The opposition to this project claimed that the rights of the citizens were not respected

and further raised the fact that landowners were harassed and threatened with death to

abandon their properties in order to place a pipeline instead of conducting a correct

expropriation process with due legal guarantees.

That’s when an NGO addressed the President of the World Bank asking for his help to

liberate the opposition leader. In this case, in spite of the general scepticism about the

effectiveness of using his “good offices”, and doubting that this case fell into his

competencies, Mr. Wolfensohn finally phoned the President of Chad and the head of

opposition was immediately liberated. This obviously opened a vivid debate and raised

several questions: to what extent the World Bank is responsible for investment projects

that end up in human rights violations (the WB, in itself, is not violating at any time

those rights); whether formal and informal ‘good offices’ are sufficient and adequate to

tackle these situations; and if there could be an better system to address human rights’

related issues. 281

E. MUJIH: “The regulation of Multinational Companies Operating in Developing Contries: A Case Study of the Chad-Cameroon Pipeline Project”, African Journal of International and Comparative Law, No. 16 (2008), pp. 83-99.

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In many cases that concern developing countries, projects are wrongly interpreted as

allowing companies’ operations without being held accountable in front of local

legislation in cases of alleged human rights violations. Amnesty International promptly

raised the question and the inherent contradiction with general international law, in the

sense victims would be deprived of any access to remedies creating inadmissible

obstacles for the realisation of human rights. In many countries the exploitation of

natural resources has contributed to worsening corruption, deteriorating social unrest,

conflicts and abuses. It is important to note that, as in the case of Chad and Cameroon

and most of the African countries, we face a situation of state fragility –if not failure282–

what makes the population particularly vulnerable, where the judicial system is

ineffective and, all in all, where it is more likely that the Governments succumb to the

companies’ pressure and interests. It consists of a delicate and precarious equilibrium

between economic development thanks to big investment projects, and the adverse

effects it might cause. Other NGO’s claim that some African governments carry out

prosecutions, tortures and massive murder to keep some oil reserves without population.

A number of cases were deemed crucial to convince international financial institutions

(IFI) to take some steps. Of course, there are precedents well before the Chadian case

exposed. Since the 1960’s, when the WB did not stop lending South Africa and Portugal

despite their apartheid and colonial policies respectively283, the CESCR has issued a

good amount of Concluding Observations284 detailing the negative impact of IMF-WB

actions on ESCR. It was argued that these IFI, being within the UN building, should –in

accordance with article 103 of the UN Charter– make their policies consistent with

wider UN priorities in terms of human rights285; nevertheless, this alleged organic link

with the UN, in itself, is unlikely to force substantive changes in view of the functional

independence of World Bank.

The problem starts with the “apolitical” character of IFI, whose operations must only be

guided by economic considerations. In particular, as it is well-known, article IV –

282 S.D. KAPLAN, Fixing fragile States. A New Paradigm for Development, Wesport (Connecticut), 2008. (See the summary: “Fixing Fragile States”, in Policy Review nº152 (December 4, 2008), in http://www.hoover.org/publications/policy-review. 283 Ignoring General Assembly Resolutions 2107(XX) and 2054(XX). 284 M. SSENYONJO: Economic, Social and Cultural Rights in International Law, Oxford-Portland 2009, Hart Publishing, pp. 128-129. 285 Ibíd., p. 134.

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Section 10 of the IBRD Agreement explicitly prohibits “political activity”286. The legal

framework of the WB has evolved or, rather, its interpretation, especially since the

Presidency of Wolfensohn. As shown by Roberto Dañino, former Senior Vice President

and General Counsel of the WB, the “concept of political interference in the context of

human rights has also evolved”287: the WB’s poverty alleviation and development

objectives can be legally articulated in terms of human rights, in line with the MDGs,

and consistently with art. 31 of the Vienna Convention on the Law of Treaties. Besides,

a country’s poor human rights record might also be read as a “financial risk”, according

to which the WB has to decide its loans. This work concluded that a distinction still had

to be made between economic and social rights and civil and political rights,

considering the latter outside the competencies of the World Bank.

It can be argued that there was a historic over-dependence on the President’s personal

capacity to conciliate conflicting interests288: in 1958, when holders of bonds issued by

Tokyo and the city agreed to request the President a plan; a year later in relation to some

goods confiscated by the British forces after their intervention in Egypt in 1956. This

was also true in controversies dealing with nationalisations: the power sector in Egypt

(1965) or some mining facilities nationalised in 1968 by the then Zaire (today DR

Congo). The good offices of the President were not limited to private-public

controversies; he also mediated in inter-State conflicts such as that between India and

Pakistan leading to 1960 treaty on the Indus River and its exploitation.

But it was urgent to find solutions less dependent on the “good offices” of the President

of the WB. The final trigger for the evolution of WB policies was Sardar Sarovar

Project in India (Narmada Project), a dam including water supply and drainage facilities

that could, on the one hand, significantly improve the population’s access to water and

286 “The Bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes stated in Article I”. 287 Internal human rights violations are no longer legitimate expressions of sovereignty out of international scrutiny: “sovereignty is no longer an absolute shield against scrutiny of States”. R. DAÑINO: “The Legal Aspects of the World Bank’s Work on Human Rights: Some Preliminary Thoughts”, in P. ALSTON and M. ROBINSON (Eds.): Human Rights and Development: Towards a Mutual Reinforcement, Oxford 2004, Oxford University Press, pp. 509-524, at pp. 519-520. 288 The following precedents are explained by Dr. Andrés Rigo Sureda, former Deputy General Legal Counsel of the World Bank at: A. RIGO SUREDA: “El Banco Mundial y los Bancos Regionales de Desarrollo”, in Curso de Derecho Internacional XXVII, Inter-American Juridical Committee of the Organization of American States, 2001, pp. 595-655, p. 634. We wish to express our gratitude to Mr. Rigo Sureda for his kind help and support.

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sanitation and the right to food (enabling better irrigation systems) in line with article 11

of the ICESCR; but on the other hand, it raised serious allegations of human rights

violations, in particular, damages to the environment and forced evictions. It was the

first time that the WB fell compelled to create an ad hoc group of experts (the Morse

Commission) to address this problematic situation; this case therefore constitutes the

direct precedent of the WB Inspection Panel, finally created in 1993289.

The progressive understanding of the WB’s Articles of Agreement has opened the door

to non-investment issues to support economic development, in particular through

informal interpretations that maintain a certain level of flexibility290. The practical

materialisation of this evolution came, as said before, with the Inspection Panel,

operative since 1994. With its quasi-judicial or arbitral function, the Panel allows

individuals (at least two, or more, comprising their representatives or NGOs) to seek

remedies if they consider that their interests or they themselves have been or could be

adversely impacted, direct or indirectly, because of a project (partly) financed by the

World Bank (IBRD and IDA)291. The procedure starts only if the Panel considers that

the request is not manifestly unfounded. In reasonable, the President of the Panel

informs the President of the WB and the Administration has 21 days to explain if the

loan has followed the Operating Procedures and if problems have already been

addressed. If this answer is considered unsatisfactory by the Panel, it can formally

request the Board of Directors the opening of a proper inquiry. Once authorised, the

President of the Inspection Panel appoints the inquirer/s (an “Investigation Team”) to

undertake such review, interviewing staff members and even conducting country visits

(which need to be authorised by the host State). Finally, the panel adopts an

investigation report with its recommendations. This report is sent to the Board and to

the concerned management departments, which have six additional weeks to exercise

their right of reply (the so-called “Management Report and Recommendation in

Response to the Inspection Panel Investigation Report”). Afterwards, the Board of

Directors and the President of the WB re-examine the whole question and adopt a final

289 Ibíd., pp. 641-642. Also see: D. FREESTONE (Ed.): The World Bank and sustainable development. Legal Essays, Leiden-Boston 2013, Brill-Nijhoff, pp.16-20. 290 A. RIGO SUREDA: “Arbitraje de inversión y desarrollo económico. La relación con el Banco Mundial”, in Arbitraje. Revista de Arbitraje comercial y de inversiones, Vol. III No. 2 (2010), pp. 357-375, at pp. 371-374. 291 Though rare, an Executive Director, or the Board acting as such, can also initiate an inspection procedure. The Inspection Panel is constituted by three individuals from different nationalities for a non-renewable five years term.

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decision on the merits and the recommendations.292 Requesters are informed within two

weeks after the Board’s meeting, including the public disclosure of the main documents.

In all phases, the borrowing or guaranteeing country is informed and updated, while the

Board can promptly adopt decisions on the subject matter without waiting to the end of

the Panel’s investigation or reports, allowing a greater flexibility in terms of rapid

response and effectiveness to ensure compliance with the Bank’s Operating

Procedures293. It can obviously be criticised that, from the very beginning, the Panel

needs the authorisation of the Board of Directors to effectively initiate an investigation,

and that the Board will also have the last word as to the eventual measures to be taken.

Moreover, since it is not a proper jurisdictional organ, the legal value of the decisions is

in doubt, the operations are not suspended just because an investigation is under

examination and requests are rejected if more than 95% of the loan has already been

disbursed.

Against this background, we shall recall however its originality and autonomy: for the

first time, an international financial institution creates an ad hoc but permanent

subsidiary organ at the highest level of the organisation, reporting directly to the Board,

with a strong institutional margin of manoeuvre to engage with all parties concerned,

thus bypassing technical barriers in terms of extraterritoriality and legal personality of

such parties (individuals, NGOs, TNCs in cases of guaranteeing countries or States

themselves as direct Borrowers and local companies). On the substance, the practice of

the Panel shows a progressive openness to general principles of IL, especially in the

interaction between international economic law and environmental protection, human

rights (indigenous peoples, minority rights, health, and labour law), poverty and

sustainable development, generating a sort of “osmosis”294 between the law applicable

by the Panel and those other fields. The institutionalisation of the Inspection Panel has

undoubtedly marked the evolution of the WB lending policies since 1994, moving from

literal – historicist to more finalistic – systematic interpretations of the founding

292 For a clear summary of these three phases, see: A. VITERBO: “Fondo Monetario Internazionale e Banca Mondiale”, in A. COMBA (a cura di): Neoliberismo Internazionale e Global Economic Governance. Sviluppi Istituzionali e nuovi strumenti, Torino 2008, G. Giappichelli Ed., pp. 189-244, at pp. 234-236. 293 The latest revision of the Inspection Panel’s Operating Procedures date April 2014 and are available at: www.inspectionpanel.org. 294 F. SEATZU: Il Panel di Ispezione della Banca Mondiale. Contributo allo Studio della Funzione di Controllo nelle Banche Internazionali di Sviluppo, Torino 2008, G. Giappichelli Ed., pp. 316-317.

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agreements295. At the same time, this has inspired other IFI: in 2001 the IMF instituted

the Independent Evaluation Office. At a regional level, only the Inter-American

Development Bank and the Asian Development Bank have similar accountability

mechanisms for the moment, which constitutes a minority of IFI.

The private arm of the WB, the IFC and MIGA established in 1999 the Office of the

Compliance Advisor/Ombudsman (CAO), whose 2007’ operational guidelines

recognise as authoritative legal sources the environmental and social requirements

“including international legal obligations” within the audit criteria296, perhaps implicitly

including soft law instruments since it ambiguously distinguishes between “legal and

regulatory requirements”. In the current CAO’s Operational Guidelines (2013) those

‘audit criteria’ have mutated into “compliance investigation criteria”297, a little harsher,

while an express mention of ‘business and human rights’298 issues is added. The IFC

Policy on Environmental and Social Sustainability establishes a set of eight

performance standards, which directly refer to diverse ESCR299, inasmuch the “IFC

recognises the responsibility of business to respect human rights independently of States

duties”300, thus confirming correlative private duties as we exposed in the first chapter.

Naturally, at the end it is “the responsibility of the client”, but the IFC commits to do

everything in its power to foster due diligence, in line with its own standards but

interestingly including “other internationally recognized sources”301. One cannot deny

the potential influence of the IFC over the international financial sector.

295 Ibíd., pp. 312-313. 296 “Audit criteria may have their origin, or arise from the environmental and social assessments or plans, host country legal and regulatory requirements (including international legal obligations), and the environmental, social, health or safety provisions of the World Bank Group, IFC/MIGA, or other conditions for IFC/MIGA involvement”. IFC/MIGA: CAO Operational Guidelines, Washington 2007, para 3.2 (at p. 21), available at www.cao-ombudsman.org. 297 IFC/MIGA: CAO Operational Guidelines, Washington 2013, para. 4.3 (at p. 23). 298 “This includes impacts related to business and human rights in the context of IFC Policy and Performance Standards on Environmental and Social Accountability”, ibid., para. 1.1 (at p. 4). 299 IFC performance standards are: 1) Assessment and Management of Environmental and Social Risks and Impacts; 2) Labor and Working Conditions; 3) Resource efficiency and pollution prevention; 4) Community Health, safety and security; 5) Land acquisition and involuntary resettlement; 6) Biodiversity conservation and sustainable management of living natural resources; 7) Indigenous peoples; 8) Cultural Heritage. IFC: Policy on Environmental and Social Sustainability, Washington January 2012, para. 5 (at pp. 1-2). 300 This includes the International Bill of Human Rights and the eight core ILO Conventions. Ibíd., para. 12 ( at p. 3). 301 According to the IFC, environmental and social due diligence typically includes the following key components: i) reviewing all available information, records and documentation related to the environmental and social risks and impacts of the business activity; ii) concluding site inspections and interviews of client personnel and relevant stakeholders, where appropriate; iii)analysing the business activity’s environmental and social performance in relation to the requirements of the Performance

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It is evident that the World Bank Group has ended up assuming that, institutionally, it

can play a positive role to pressure both governments and transnational companies to

pressurise them to respect environmental and social rights, particularly dealing with

their preventive – procedural dimension within investment operations (mainly, access to

information and consultation, more importantly in cases of needed resettlements of

populations or if indigenous peoples are involved). The WB Inspection Panel has

received 104 cases until 2015, only 34 of these were admitted to the next stage (actual

investigation) by the Board of Directors; in five cases, the Panel recommended to

undertake the investigation but the Board of Directors did not authorise it. Most

complaints come from Africa (31%) followed by the LAC Region (26%) and South

Asia (22%)302.

In summary, the institutional strategy of the WB was translated into two secondary

objectives: in the first place, it was important to clarify and ‘grease’ the relationship

between general international law and investment law, before analysing the place of

internationally recognised human rights and the eventual responsibility of the WB or IFI

in particular projects. This was done thanks to a progressive interpretation of the articles

of agreement. The WB leads the way303 but the numbers show there is still a long way

to walk. Lest we forget the vital role of States in their governing capacity of IOs. The

attention paid to the direct responsibility of the WB as a lending institution is, very

probably, “disproportionate” 304: legally speaking, the direct responsibility is more likely

to fall on recipient States; substantively speaking, problems touch the WB only

indirectly and institutionally. Financial institutions can play a role but, as member-

driven organisations, it is equally important to raise Member-States awareness of these

problems. In other words, the WB institutional responsibility has evolved in the

standards and provisions of the World Bank Group Environmental Health and Safety Guidelines or other internationally recognized sources, as appropriate; and iv) identifying any gaps therewith, and corresponding additional measures and actions beyond those identified by the client’s in-place management practices”. Ibíd., para. 28 (at p. 6). 302 Statistical data available at www.inspectionpanel.org. 303 The World Bank has currently undertaken a revision and update of its Environmental and Social Framework. The Second Draft for consultation, issued on 1st July 2015, is now under discussion and incorporate a strong emphasis on sustainable development. Available at http://consultations.worldbank.org/consultation/review-and-update-world-bank-safeguard-policies 304 Says Pasquale De Sena: “Senza escludere la poblematica della risponsabilità diretta di tali organizzazioni, [...] l’attenzione usualmente dedicata ad essa è, con ogni probabilità, sproporzionata”. This author further explains: “l’ipotesi della responsabilità degli Stati membri [...] possiede, perlomeno in astratto, una consistenza giuridica maggiore, rispetto a quella della loro diretta resposabilità [delle organizzazioni internazzionali]” P. DE SENA: “Fondo Monetario Internazionale, Banca Mondiale e Rispetto dei Diritti Dell’Uomo”, in A. LIGUSTRO and G. SACERDOTI: op. cit., pp. 829-858, at pp. 831 and 845.

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direction of forcing or increasing Member States substantive responsibility, especially

recipient States (as direct Borrowers or as Guaranteeing countries). Ultimately, the

Panel can be described as an instrument to put pressure on recipient States, rather than

on the Bank’s administration305, to comply with certain non-investment-related

minimum standards. In any case, this evolution has clearly moved from mere “good

offices” (a phone call in the Chadian case) to more predictable and better guarantees

(the Inspection Panel).

BITs, investment contracts, the ICSID and the place of human rights

Having said this, the World Bank or regional banks are not the only financial investors

for States. In reality, nearly 75% of world investments are actually financed by private

institutions: banks and credit agencies to exports and investments. Business-lead

initiatives have followed a very different approach and, as mentioned elsewhere in this

work, companies were more concerned with corruption, the environment and social

abuses in response to new societal expectations they were starting the detect in the

markets. In this line, the Equator Principles, launched in 2003 under the auspices of the

WB-IFC jointly with private banking houses, constitute the key code for the banking

sector. Entities and institutions that voluntarily declare their adherence to this soft law

instrument assume thereby their commitment to fostering sustainable investments and to

take into account social risks when financing a project. The Equator Principles were

followed by the UN Principles for Responsible Investment, another private-led code

established in 2006 further to the initiative of the UN Global Compact and the UNEP

Finance Initiative. Both the Equator Principles and the UNPRI constitute private-led

initiatives to foster soft instruments that reassemble public and private financial

institutions around some ethical standards and goals before green-lighting projects. The

Equator Principles have been adopted by 81 financial institutions from 36 countries

covering “over 70% of international Project Finance debt in emerging markets”306. In

theory, projects without an adequate social and environmental impact assessment would

be deprived of their financial support. The UNPRI defends six environmental and social

305 “El Grupo puede aparecer en tales condiciones como un vehículo de presión –y hasta de presión política- sobre los países prestatarios, más que sobre la administración del Banco.” A. RIGO SUREDA: op. cit., p. 644. 306 See www.equator-principles.com

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principles, plus 35 proposed actions in connection to these, voluntarily accepted by

1380 signatories (asset owners, investment managers and service providers), which

control $59 trillion in assets307.

These key steps were applauded by the private sector although the real problem is to put

flesh on the bones of notions such as “social impact”, while controlling the effective

implementation of these objectives. During the 2005 revision of the Equator Principles,

the mention to social impact was legally reoriented to the respect of international

treaties and covenants adopted by States. We are therefore lucky if the State has ratified

the main international human rights treaties (not always the case). Despite obvious

critics concerning their legal value and actual effectiveness, there are two positive

aspects: it introduces “process standards” within corporate behaviour and it increasingly

considers its consistency and cross-fertilisation with internationally recognised human

rights law. In other words, their contribution is mainly “cultural”, “normalising the

consideration of social and environmental factors in corporate decision-making in the

investment sector and, in this sense, it is contributing to the development of

international CSR norms for financiers and investors”308.

Leaving aside the private sector initiatives, globalisation has led to a second problem:

when States make bilateral treaties or conclude contracts, they place themselves under

the obligation to protect foreign investors in front of non-economic risks, and do not

usually include responsibilities for investors as a counter-balance, for example, in terms

of human rights. Bilateralism still dominates the regulation of international investments

at a global level and international organisations might claim more room to make

recommendations309. When an investor, for example, acts against an individual or

collective right within the territory where the investment takes place, the bilateral

agreement does not foresee any kind of sanction to the investor or the possibility of

compensating the victim for the alleged damage. And if the State’s legislation does

307 See www.unpri.org 308 K. MILES: “Soft law instruments in environmental law: models for international investment law?”, in A.K. BJORKLUND and A. REINISCH: International Investment Law and Soft Law, Cheltenham 2012, Edward Elgar Publishing Ltd., pp. 82-108, at pp. 103-105 (on the UNPRI and Equator Principles), and p. 104 (citation). 309 I. GARCÍA RODRÍGUEZ (†): La protección de las inversiones exteriores: los acuerdos de promoción y protección recíproca de inversiones celebrados por España, Valencia 2005, Tirant Ed., pp. 423-424.

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envisage the situation or simply does not apply the legislation and turns a blind eye to

problems, investor’s impunity can be almost absolute.

In contrast, such bilateral texts allow the investor to solve potential controversies with

the State directly through an international commercial arbitration, without exhausting

internal remedies and excluding diplomatic protection. The investment protection

system therefore creates an autonomous regime of States’ responsibility, tendentiously

escaping or outgoing the general norms of international law310. This way, Sates find

themselves involved in important controversies showing the tension between the

necessary protection of investments with its particular regime and the respect for human

rights. This tension usually emerges when dealing with privatisations of basic services

such as drinkable water in developing countries, power supply, and highways

construction, to cite only some of them.

When a bilateral investments’ treaty is applicable, we expect States’ due diligence to

ensure the protection of such foreign investments. Sometimes, it seems difficult to

explain some States initiatives against concrete investors (mainly, nationalisations),

except in clear cases of “general interest” or what is called the “parameters inherent in a

democratic State”.

The problem is that, when determining the applicable law to dispute settlements

between States and investors, the parties do not usually consider the application of

international human rights law, not even States themselves when making investment

contracts. Nor is it done in bilateral treaties when, in the absence of choice by the

parties, the applicable law in a dispute based on a bilateral investment treaty is the law

of the receiving State as well as principles and norms of International Law. Only this

reference to IL, frequently vague and minimal311, could be linked to international human

rights law or, for instance, clarify the obligations of the receiving State.

This is the reason why the first question is the place of general international law within

investment law, before wondering whether there is room for human rights or not. Some

310 J.A. VIVES CHILLIDA: El Centro Internacional de Arreglo de Diferencias Relativas a Inversiones (ICSID), Madrid 1998, McGraw Hill, pp. 1-12. In the Spanish legal doctrine see, in general: A.L. CALVO CARAVACA and L.F. De la GÁNDARA: El arbitraje comercial internacional, Madrid 1989, Tecnos Ed. 311 I. GARCÍA RODRÍGUEZ: op. cit., pp. 405-408.

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arbitration awards show open possibilities to introduce public international law

principles in investment disputes and, indirectly, core human rights principles.

In principle, general international law is never excluded in dispute settlements. The

problem starts with the interpretation of article 42(1) of the ICSID Convention, the first

sentence of which states that “the tribunal shall decide a dispute in accordance with such

rules of law as may be agreed by the parties”, while the second sentence adds that “in

the absence of such agreement, the Tribunal shall apply the law of the Contracting State

party to the dispute (including its rules on the conflict of laws) and such rules of

international law as may be applicable”. Does this mean that general international law is

only applicable in the absence of such a choice of law by the Parties? Or only in cases of

lacunae or contradictions with domestic legislation? Is it then necessary to demonstrate

that the parties have failed to choose the applicable law in order to obtain recourse to

International Law? And in case of choice of law, is it then absolutely necessary to

shame domestic systems and show inconsistencies and lacunae in order to open the way

for public international law? Public international law hasn’t any role outside these strict

requirements? The only possibility to use public international law is the second sentence

of art. 42(1)? Is it otherwise excluded?

When there is a choice of applicable law, the Tribunal has sometimes decided that there

is no reason to ‘go further’ and that a very restricted role of IL may be enough, only for

corrective or supplementary purposes. This is the stance in AUCOVEN vs. Venezuela,

when the contract at stake was easily isolated upholding ‘self-contained regimes’

theories312. It is clear that the tribunal did not feel obliged by the previous and more

liberal award, Wena vs. Egypt, where the ad hoc committee accepted that both domestic

law and international law could be simultaneously applied: “The law of host State can

indeed be applied in conjunction with international law if this is justified. So too

international law can be applied by itself if the appropriate rule is found in this other

312 “The role of international law in the ICSID practice is not entirely clear. It is certainly well settled that international law may fill lacunae when national law lacks of rules on certain issues (so called complementary function). It is also established that it may correct the result of the application of national law when the latter violates international law (corrective function). […] Does the role of international law extend beyond these functions? The recent decision of the ICSID Ad hoc Committee in Wena Hotelts Ltd. Vs. Arab Republic of Egypt accepts the possibility of a broad approach to the role of international law, and that the arbitral tribunal has a “certain margin and power of interpretation”[…] Whatever the extent of international law plays under article 42(2) (second sentence), this Tribunal believes that there is no reason in this case, considering especially that it is a contract and not a treaty arbitration, to go beyond the corrective and supplemental functions of international law”, at ICSID: AUCOVEN vs. Bolivarian Republic of Venezuela, Award of 23 September 2003, Case No. ARB/00/5, para. 102.

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ambit”313. But in Wena, the tribunal had already stated that the parties hadn’t made a

“choice of law under the first sentence of Article 42(1)”314, and this circumstance

facilitated that broad margin of interpretation to include IL.

It seems difficult to understand why the first sentence of article 42(1) would exclude

general international law, when appropriate. It looks like legal juggling the requirement

to place ourselves in the context of the second sentence –art. 42(1), before allowing the

use of international law: nor the first nor the second sentence should, in principle,

exclude international law. In support of this reasoning, the tribunal has clarified that

both international law and domestic law are applicable jointly: “international law is

fully applicable and to classify its role as ‘only’ ‘supplemental and corrective’ seems a

distinction without a difference”315, therefore rejecting a simplistic and reductionist

approach to international law.

Interestingly, in AAPL vs. Sri Lanka, the tribunal made an unprecedented effort of

systematisation of the ICSID case-law: a unique proposal of rules of interpretation,

according to which “ [i] n addition to the ‘integral context’ [of the treaty or contract],

‘object and intent’, ‘spirit’, ‘objectives’, ‘comprehensive construction of the treaty as a

whole’, recourse to the rules and principles of IL has to be considered a necessary factor

providing guidance within the process of treaty interpretation”, and “establishing the

practice followed through comparative law survey of all relevant precedents becomes an

extremely useful tool to provide an authoritative interpretation”316.

In light of this, there are no contracts without law, nor contracts overruling legal

systems: in AAPL, the company maintained that Sri Lanka had failed to protect the

investment since “the Parties [to the BIT] substituted the ‘due diligence’ standard of

general international law by a new obligation creating an obligation to achieve a result

(‘obligation de résultat’), providing the foreign investor a sort of ‘insurance’ against the

risk of having his investment destroyed under whatever circumstances”317. But the

313 ICSID: Wena Hotels Ltd. vs. Arab Republic of Egypt, Annulment Proceeding, Decision of 5 February 2002, Case No. ARB/98/4, para. 40. 314 Ibíd., para. 36. 315 ICSID: Amco vs. Indonesia, Resubmitted Case, Award of 5 June 1990, Case No. ARB/81/1, para. 40. 316 ICSID: AAPL vs. Republic of Sri Lanka, Final Award of 27 June 1990, Case No. ARB/87/3, para. 40 (« rules D and E »). 317 Ibíd., para. 45.

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tribunal finds that applicable law is a “false problem”318 and that a BITs interpretation

that implies a higher exigency of due diligence against Sri Lanka is inconsistent with

general international law, since it disregarded the fact that “rules of international law

have to be taken into consideration by necessary implication, and not be deemed totally

excluded as alleged by the Claimant”319 –here is also the limit of the prevalence of any

lex specialis. So it seems that general international law is not excluded in none of the

two sentences of article 42(1) of the ICSID Convention, provided the situation

sufficiently justifies it.

SPP vs. Egypt constitutes a milestone in the ICSID jurisprudence. First of all, it

confirmed the above considerations on a broader role for International Law, well above

the traditional supplemental and corrective functions. It was ruled that the arbitral

committee can make a reference to International Law and thus change the effects of the

Parties’ choice of law, if necessary. This is the case even when such a choice of law is

clear, in order to avoid a violation of IL by the “exclusive application of municipal

law”320. In effect, nobody can ignore that the autonomous and isolated recourse to the

law designated by the parties as applicable, at end of the day, can be in conflict with

International Law, and not necessarily because internal legislation is ‘incomplete’ or

‘incorrect’, but simply because an isolated application –by itself– can produce unlawful

results.

SPP vs. Egypt is also important because it allows us to address our second question, the

place of human rights. This case concerns the annulment and expropriation of a tourism

investment project following to the discovery of archaeologic remains –it was baptized

“the pyramids case”. The company, Southern Pacific Properties, led a joint venture,

which had already initiated the works by July 1977. After the discovery at the end of

that year, public opposition increased against the project and pushed for a legislative

change to protect cultural rights (art. 15 ICESCR) and, specifically, cultural heritage in

line with the UNESCO Convention for the Protection of the World Cultural and Natural

Heritage, which entered into force in Egypt in December 1975. In 1979, at the initiative

318 Ibíd., para. 24. 319 Ibíd., para. 52. 320 That situation would betray the spirit of the Washington Convention: “When municipal law contains a lacunae, or international law is violated by the exclusive application of municipal law, the Tribunal is bound in accordance with Article 42 of the Washington Convention to apply directly the relevant principles and rules of international law. As explained by one of the author of the Washington Convention […] ”. ICSID: SPP vs. Arab Republic of Egypt, Award on the merits, Case No. ARB/84/3, para. 84.

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of Egypt, the UNESCO Committee was requested to inscribe the Pyramids plateau as

World Heritage Site, implying the maximum protection. According to the arbitral

tribunal, the obligation to compensate an expropriation remains: the expropriation is

considered legal under International Law and “an unquestionable attribute of

sovereignty”321. The obligation to pay an adequate “compensation for a lawful

expropriation” is not the same as a “reparation for an injury caused by an illegal act

such as a breach of contract”322. Of course, the lawfulness of Egypt’s action does not

diminish the expropriatory nature of the measure imposed, and to expect anything else

is just unrealistic. But the role of the UNESCO Convention is also important when

calculating the adequate compensation: first of all, it is precisely limited to a

“compensation” and does not include any “reparation” since it was a lawful

expropriation; and secondly, given that no reparation is foreseen, the arbitral tribunal

decides that the investors are not entitled to any lucrum cessans after the date of the

entry into force of the UNESCO Convention (1979)323 –a by no means negligible

economic saving for the State324.

We must be cautious and realistic: in CDSE vs. Costa Rica, the principle by which any

expropriation is subject to compensation was confirmed, “no matter how laudable and

beneficial to society as a whole […] even for environmental purposes”325 –in that case,

to protect biodiversity. Only in case of unlawfulness of the measure, the investor would

further be entitled to reparations and lucrum cessans. The “international source of the

obligation to protect the environment”326 (we might add, human rights in general) does

not always make a difference: it is also a problem of legal certainty with regard to

guarantee private property and protect foreign investors, so as to promote States’

awareness of their own responsibilities and commitments before concluding contracts

and accepting investments.

321 In other words, a “lawful exercise of the right of eminent domain”, ibíd., para. 158. 322 Ibíd., para. 183. 323 The tribunal “could only award lucrum cessans until 1979, when the obligations resulting from the UNESCO Convention with respect to the Pyramids Plateau became binding on the Respondent. From that date forward, the Claimant’s activities would have been in conflict with the Convention and therefore in violation of international law, and any profits that might have resulted from such activities are consequently non-compensable”. Ibíd., para. 191. 324 For a detailed and systematic study, perhaps more optimistic than us, on the place of cultural heritage in international investment law see: V. VADI: Cultural Heritage in International Investment Law, Cambridge 2014, Cambridge University Press, passim. 325 ICSID: CDSE vs. The Republic of Costa Rica, Final Award of 17 February 2000, Case No. ARB/96/1, para. 72. 326 Ibíd., para. 71.

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Regarding contracts and investments, States must conduct their own studies before

committing themselves to new obligations. In Metalclad vs. Mexico, also touching on

environmental issues but under NAFTA, a company incorporated in the USA had

obtained a Mexican federal authorisation to build an hazardous waste transfer station

and landfill in the valley of La Pedrera (Guadalcazar –Mexico), but the local authorities

refused to issue the final building authorisation for environmental reasons. The arbitral

tribunal logically considers that Metalclad “was led to believe, and did believe, that the

federal and state permits allowed for the construction and operation of the landfill”327

and the company “was merely acting prudently and in the full expectation that the

permit would be granted”328. Again, human rights are not a trumpery excuse for States’

internal administrative chaos and lack of legal certainty.

In sum, our discussion on the place of public international law and, subsidiarily, of

human rights law, in relation to investment law, is not intended to demonstrate that

IHRL and investment protection are “interdependent” –the ICSID already ruled they are

not329, but to show that international investments have to be contextualised and

integrated into general international law as a whole, which is a less audacious approach

with a sounder legal footing.

Indeed, the political discourse under which human rights obligations need to be

prioritised over investment protection constitutes a dialectic trap without fundament in

many cases, used by some States as a shortcut to wash their image and bypass internal

inconsistencies. In our view, this kind of reasoning will probably be unacceptable for an

arbitral tribunal in almost any situation, not even in the case of a developing country.

For example, in Klöckner vs. Cameroon I, the award established that the company had

failed to duly inform the State of the changing economic scenario in 1973, which would

render the industrial investment unprofitable. The corporation therefore breached its

obligation of full disclosure between partners, so the compensation would be limited to

327 ICSID : METALCLAD CORPORATION vs The United Mexican States, Award of 30 August 2000, Case No. ARB(AF)/97/1, para. 85. 328 Ibíd., para. 89. 329 In Borders Timbers Limited et al. vs. The Republic of Zimbabwe, the tribunal was reluctant to the claimants assertion that IHRL has a central role in arbitration proceedings, and the tribunal argumentation proves it is very difficult to provide “evidence” to “support […] that international investment law and international human rights law are interdependent such that any decision of these Arbitral Tribunals which did not consider the content of international human rights norms would be legally incomplete”. ICSID: Borders Timbers Limited et al. vs. The Republic of Zimbabwe, Procedural Order No. 2 of 26 June 2012, Case No. ARB/10/25, para. 58.

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the facilities already built and in use. However, as a commentator points out, the

tribunal took care not to leave the door opened to the ‘right to development’330:

obviously, one can ask if Cameroon wasn’t also able to learn on its own the worsening

of the economic scenario by 1973, if it is enough to be a developing country to allege

that the States’ capacities are reduced (in terms of access to financial advice and

information). However, the award took a rather classic stand: the contractual

relationship between Klöckner and Cameroon apparently implied that the company was

responsible for all the phases of the project, from information and financial

perspectives, to proper works. The failure to disclose all available information to a

partner, including a damnun emergens, was sufficient to demonstrate a lack of “good

faith” on the company’s side, avoiding the debate on Cameroon’s ability to detect on his

own the economic crisis of 1973.

Our “integrationist perspective”331 of investment law within general international law

shouldn’t be understood as challenging the specificity of arbitral rulings, whose centre

will remain commercial matters. Human rights can play a role in investment arbitration,

but States’ powers to protect alleged public interests are not a passe-partout: IL does

not allow States to disregard any of its international obligation; they are “subject to both

international obligations, i.e. human rights and treaty obligations, and must respect both

of them equally”332. With regard to water and sanitation, an ICSID tribunal has clarified

this problem:

« En réalité, les droits de l’homme en général, et le droit à l’eau en particulier, constituent l’une des diverses sources que le Tribunal devra prendre en compte pour résoudre le différend car ces droits sont élevés au sein du système juridique argentin au rang de droits constitutionnels, et, de plus, ils font partie des principes généraux du droit international. […] Mais ces prérogatives sont compatibles avec les droits des investisseurs à recevoir la protection offerte par l’APRI. […] Mais l’exercice de ces pouvoirs ne se fait pas de façon absolue et doit, au contraire, être conjugué avec le respect des droits et des garanties octroyés à l’investisseur étranger en vertu de l’APRI […]

330 E. GAILLARD : La jurisprudence du CIRDI, Paris 2004, Ed. A Pedone, pp. 133-134. 331 R.A. LORZ: “Fragmentation, consolidation and the future relationship between international investment law and general international law”, in F. BAETENS (Ed.): Investment Law within International Law. Integrationist Perspectives, Cambridge 2013, Cambridge University Press, pp. 482-493. 332 ICSID: Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA vs. The Argentine Republic, Decision on liability of 30 July 2010, Case No. ARB/03/19, para. 262.

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Contrebalancer ces deux principes sera la tâche que le Tribunal devra effectuer lors de son analyse des prétentions substantives […] ».333

In the context of the serious Argentinian debt crisis in 2001 and 2002, which led to a

‘corralito’ (bank freeze), it has been argued that the ‘state of necessity’ (a situation of

economic emergency) justified the State’s failure to satisfy the rights of international

holders of sovereign bonds. This led to a variety of arbitral awards with mixed results

depending on the BIT applicable; in Impregilo, many authors regret that the arbitrators

considered that Argentina itself had contributed to the financial crisis and that there was

no justification to recur to ‘state of necessity’ allegations, on which it is said that too

strict criteria were established334. But one may ask if we really think that Argentina did

not contribute to the worsening of the financial situation –if not to its origin, starting

with inadequate currency policies, like the creation of a new currency (the austral) in

1983, which required new loans and inflated public debt, alarmingly increasing inflation

rates, not to mention widespread corruption. The major lesson learnt from that crisis is

that exception clauses, comprising non-precluded measures (for economic or

whatsoever reasons), could be added to BITs so as to face economic emergencies while

overcoming the unfortunate lack of a treaty or articles adopted on States’ responsibility,

which would have probably clarified the notion of ‘state of necessity’ as in the project

of the ILC.

In any case, it has been said that such exception clauses can be interpreted as a lex

specialis that somehow annuls the stricter requirements of customary international law

to effectively put forward a state of necessity335; however, we think this consists of

playing the game of those interested in the fragmentation of IL. The real lex specialis is

the bilateral treaty and not a clause within it. It would be wiser to argue that such an

exception clause is, as its very name indicates, an exception to the BIT, which is the real

lex specialis. In this way, the proper lex specialis –the BIT, incorporates an exception

clause aimed at reintroducing general international law into the BIT (like the state of

necessity). If human rights clauses or general exception clauses are added to new 333 ICSID: SAUR International S.A. vs. Argentine Republic, Decision on Jurisdiction and Liability of 6 June 2012, Case No. ARB/04/4, para. 330-332 (original versions only in French and Spanish). 334 See, for example: I. IRURETAGOIENA AGIRREZABALAGA: “Protección de inversor extranjero versus salvaguardia de intereses esenciales del estado en contextos de crisis económica, financiera y social”, in F.J. QUEL LÓPEZ and M.D. BOLLO AROCENA: Intereses públicos, intereses privados, su defensa y colisión en el Derecho Internacional, pp. 63-97, at pp. 94-95. Also refer to the bibliography therein. 335 This would only be so if the clause specifies those (looser) requirements of the state of necessity, which is unlikely to happen given the usually vague language of BITs. Ibíd., p. 93.

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generation BITs, it is not to play the game of fragmentation and allege their character of

lex specialis to ensure their primacy; on the contrary, it is to reflect the relational

character of IL and that investment treaties operate within a wider legal context that

may include human rights or the state of necessity. Legal doctrine has to adequately

interpret those clauses as an open window for general international law and a way to

effectively consider the relational character between competing regimes under IL (like

investment protection and human rights). Such clauses should not be read in terms of a

lex specialis within the lex specialis. Such clauses can precise and clarify some

customary practices in the subject of ‘state of necessity’ –given that there is room for

clarification since the General Assembly did not adopt the ILC draft articles on the

responsibility of States. In this sense, States further have the opportunity, through those

clauses, to specify and detail –to their liking– a consuetudine, without further

contributing to the so-called ‘self-contained regimes’. In this sense, a spread practice

that includes those clauses on human rights and state of necessity can be beneficial in

the long term, provided we understand them in line with the relational character of IL.

In any of the previous situations, the compatibility between IHRL and investment

protection will naturally depend on the availability of an “alternative that is […] least

inconsistent”336 with the BIT, MIA or Contract at stake. A different approach to the

dialectic between investments and human rights will be likely to fail, as well as the

misuse of human rights to hide legal uncertainty or to withdraw ex post risky

investments not duly evaluated in advance. These considerations are essential to assess

if “measures are proportional to the public interest presumably protected thereby and to

the protection legally granted to investments” 337, as noted in an interesting case where

the arbitral tribunal directly cites the ECHR to build this concept of proportionality.

336 In a case brought to UNCITRAL arbitration under NAFTA, the Committee reached that conclusion when considering the compatibility between the Basel Convention and NAFTA: “Even if the Basel Convention were to have been ratified by the NAFTA Parties, it should not be presumed that Canada would have been able to use it to justify the breach of a specific NAFTA provision because… where a party has a choice among equally effective and reasonably available alternatives for complying… with a Basel Convention obligations, it is obliged to choose the alternative that is… least inconsistent… with the NAFTA. If one such alternative were to involve no inconsistency with the Basel Convention, clealy this should be followed” (emphasis in the original). UNCITRAL: S.D. MYERS Inc. vs. Government of Canada, Partial Award of 13 November 2000, para. 215. 337 Again under the NAFTA: ICSID: Técnicas Medioambientales Tecmed SA vs. Mexico, Award of 29 May 2003, Case No. ARB(AF)/00/2, para. 122. (Original in Spanish, available at www.icsid.worldbank.org).

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Yet States do not always win these cases –sometimes because the arbitral tribunal finds

their human rights allegations abusive or elusive of other international obligations, the

open possibilities shouldn’t be neglected. All these cases constitute an important

improvement in the overall because the evolution shows an increasing openness. States

will have to make a genuine effort to duly prove their human rights allegations, the

proportionality of the measures adopted, the compatibility with investment protection,

as required by the above cited jurisprudence. Certainly, it is still not clear to what extent

an arbitral tribunal –such as the ICSID– might put into practice this linkage: at first

sight, investment headquarters don’t seem the place to protect human rights. It doesn’t

look as if it was a competency of those tribunals. Furthermore, arbitrators are commonly

selected amongst lawyers and litigators with sufficient practice in international

commercial law, and logically not in public international law. The growing number of

ICJ judges that also act as arbitrators (not being incompatible), may change the

historical lack of public international law perspectives within investment disputes.

However, it is interesting to note that there is nothing stopping one of the parties from

proposing a human rights expert as an arbitrator, at least in some cases, obviously

jointly with commercial lawyers in the arbitral tribunal. Nevertheless, the language of

investment contracts usually lacks of this level of concreteness and specificity.

From a pragmatic approach, a high specialisation in international commercial law is

perfectly understandable; the easiest desirable solution could be double: a) to provide

arbitrators with a human rights perspective that might complete their assessment of the

facts; b) to make sure that the contract includes at least one general reference to

“general international law and other international obligations of the State” in line with

the usually vague language of these contracts. Historically speaking, international

investment law was born to protect investors, who traditionally were the main

beneficiaries of arbitration; this has changed and States’ legitimate interests are now

“protected” in more and more cases338 and some general interests have found a place,

even anti-corruption339.

338 « Plus généralement, on a pu assister, au cours des dernières années, à une évolution sensible des rôles, les États n’étant plus systématiquement défendeurs, si ce n’est défaillants, et les principes tel que le respect des conventions ou l’exécution de bonne foi des conventions n’étant plus systématiquement invoqués par les seuls investisseurs. » E. GAILLARD : op. cit., p. 213. 339 In Wena vs. Egypt, the arbitral tribunal accepted that corruption could justify the annulment of a contract: “The first concerns the validity of the leases in connection with an alleged incident of corruption or conflict of interest […] While such improper influence can invalidate the lease agreements under Egyptian law, or for the matter of corruption also under international law, such unlawful act has to be

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We don’t forget either that arbitrations are conducted in closed sessions, making it

difficult to know the comparative importance given to human rights or non-investment

issues, and their final weight, except when the arbitral award is explicit and public. It is

true that an increasing number of decisions are made public and transparency is wider,

since Metalclad vs. Mexico (cited above), the first time an amicus curiae submission

was accepted, which is a consolidated practice by now340. Acting more boldly, but less

realistically, we could also think of including specific human rights clauses in bilateral

investment treaties or some kind of reference to the protection of human rights and its

levels of obligations, both for States and investors.

Investment contracts could eventually be revised in order to include a clause by virtue

of which the investors accept the obligation to respect international human rights law.

However, as we have said above, this is an unlikely event: companies pressure States

affirming that specific human rights legislation could decrease the economic growth and

the benefits expected from the project. If a State assumes this reasoning, it should be

considered to constitute a breach of its responsibility with regards to human rights. To

sum up, under the light of public international law, an investment contract should be

interpreted in a way that a State action to protect human rights cannot be considered

contrary to any investment contract, or impeding its development, and of course would

not constitute a reason for the termination of the contract. This does not mean that

investors will be left unprotected: we have seen that the open windows for human rights

protection do not challenge the essential principles of investment law. Depending on the

strength of the public goals pursued by the State, the amount of eventual compensations

might vary; and reparations might be excluded, only if States act more responsibly

when juggling with their diverse international obligations and their internal problems.

Conclusion

There are signs of hope but the work is still incomplete to ensure respect for human

rights with reference to international investments. Transparency on the content and

scope of the projects being financed is absolutely crucial, as well as the content of

proved”. ICSID: Wena Hotels Ltd. vs. Arab Republic of Egypt, Annulment Proceeding, Decision of 5 February 2002, Case No. ARB/98/4, para. 47. 340 E. GAILLARD: op. cit., pp. 618-619.

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investment contracts and international agreements –of course, without disseminating

confidential issues that can be important for private companies in front of their

competitors.

All in all, human rights mainstreaming is an idealistic strategy to include HR within the

contractual framework and, even before, during its negotiation. The solution can be both

pragmatic and holistic:

-reinforce multilateralism and the role of IOs to offset the negative effects of a

mainly bilateral or simply contractual system of regulating international investments341.

Multilateral fora are more likely to promote consistency at an international level, by

avoiding undue legal fragmentation, fostering policy transfers and proposing model

BITs and MIA together with additional interpretative instruments able to consolidate an

opinio iuris in favour of consolidating the human rights’ transversality.

-means of dispute settlement can be provided with a human rights-based

approach when necessary, which is not a threat to the central place of international

commercial law, but taking into account that States have concurring international

obligations;

-general exceptions clauses could be put in place in model BITs, MIAs or

contracts. Bearing in mind the tendency to vagueness or ambiguity in these instruments,

a general mention to ‘international law principles and other international obligations’

could be enough to open some windows, read in conjunction with the Vienna

Convention on the Law of Treaties. More specific formulas directly mentioning human

rights might be studied (human rights clauses). The spread inclusion of such clauses can

have customary effects in the long run and solve the problem of allegedly self-contained

regimes.

-in connection to this, further clarification could be made as for the role of

general international law, which has been used so far to solve contradictions between IL

and domestic law, or to complete the latter when necessary. The use of general

international law could be extended to include core internationally recognised human

rights principles if necessary. The practice in this regard shows some open windows to

be further developed. 341 Meg Kinnear, Secretary-General of the ICSID, already detects that “[p] erhaps the most significant recent trend is the shift from negotiating bilateral treaties to negotiating treaties on a regional basis”. M. KINNEAR: “Navigating International Dispute Resolution: Innovation in Investor-State Arbitration”, in Hugo Grotius Conferences –Universidad San Pablo CEU, Madrid 2013, Ed. Fundación Universidad San Pablo CEU, 33 pp., at pp. 17-18.

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-it could finally be envisaged to require that potential concessionary companies

(or consortium of companies) have CSR measures and codes of conduct, extended to

subcontractors. In parallel, it has to be studied to what extent the existence of codes of

conduct, made public and approved at the senior level of TNCs, can have a “contractual

value” in the context of a dispute. At least, such a development may not be discarded ad

futuram, if the international practice continues in the same direction342.

Many States are developing Corporate Social Responsibility Guidelines and NAPs,

conscious that a soft law instrument can contribute to the improvement of their respect

for human rights, in the understanding that human rights are a transversal interest within

the international society and, if a hard law perspective is finally needed, it should be

made available and mainstreamed within the means of dispute settlement without

challenging the specificities and central place of commercial matters. More importantly,

a current trend shows that more and more States include general non-investment clauses

in BITs and MIA: an early precedent is the Netherlands-Costa Rica BIT (1999)

expressly “including its laws and regulation on labour and environment”, or even in the

multilateral Common Market for Eastern and Southern Africa, investments might be

subject to environmental and social impact assessments343. The spread of these “new

generation BITs”344 would support the consolidation of an international practice in this

regard and building a wider consensus in the long run. Individuals have the rights to

claim against the investing company and access to justice has to be guaranteed, up to

the exhaustion of domestic remedies (with the well-known exceptions of unreasonable

delays, ineffective or unavailable appeals). Otherwise the equality before the law is

seriously undermined and non-discrimination is a general principle that, whether or not

342 On the eventual contractual relevance of codes of conduct see: C. CRONSTEDT: “Some Legal Dimensions of Corporate Codes of Conduct”, in R. MULLERAT: op. cit., pp. 443-460, at pp. 452-455. Being a problem of civil law, it falls beyond the scope of this research. 343 A comment of both precedents at: C. TIETJE and E. SIPIORSKI: “The evolution of investment protection based on public international law treaties: lessons to be learned”, in A.K. BJORKLUND and A. REINISCH (Eds.): op. cit., pp. 192-237, at pp. 233-235. 344 However, these precedents are still far from widespread. Prof. Attila Tanzi provides some additional examples and precedents in the above-cited case-book, such as the Hungary-Russian Federation BIT (1996, art. 2 referred to “protection of the environment, morality and public health”), US-Uruguay BIT (2006, in which the Preamble states that it must be read “consistent[ly] with the protection of health, safety, and the environment and the promotion of consumer protection and internationally recognised labour rights”, as well as art. 12 specifically on the environment), the US Model BIT (Preamble and article 12), article 1114 of NAFTA on the environment, the Japan-Philippines Economic Partnership Agreement Helsinki (2008, in which art. 99 protect “human, animal or plant life or health” –very similarly to WTO exception clauses in GATT agreement, see following section). A. TANZI and F. CRISTANI (Eds.): International Investment Law and Arbitration. An Introductory Casebook, Milano 2013, CEDAM Ed., pp. 319-321.

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a State has ratified a particular treaty, is considered customary international law. No

investment contract may operate outside this frame even though the success or failure of

developing these niches of opportunity (for human rights within investment law) will

depend on the States’ good faith when it comes to put it into practice.

2.2.2 Screening the WTO: open windows

The approach to this subject is recurrently passionate: if it is true that trade is about

business and business is about competition and private benefits, we need to

acknowledge that it makes sense to promote a trade culture that respects consumers’

rights to the extent trade doesn’t happen without consumers. As investment contracts

are not, by themselves, ontologically opposed to human rights, multilateral trade

agreements aren’t necessarily a threat to consumers’ rights. We face, of course, a

number of conflicting interests: States, TNCs, lobbies, media, NGO’s and CSO’s,

individuals and international organisations. There are, also, shared responsibilities. This

said, we would falsify the debate if we shift responsibility only towards consumers: it

would be impossible for every single consumer to ethically evaluate every product he or

she buys before purchasing it. Responsibility is also sitting on the rest of actors.

WTO’s institutional role in context

Trade has suffered substantial changes in the second half of the twentieth century,

starting with the rising exchange of intermediate goods instead of final products.

Commercial services grow faster and are the biggest part of international trade in a

context of constant decline of communication and transportation costs. A more recent

change is the growing importance of services –the enablers of global value chains.

Comparative advantages are in intermediate goods and not anymore in final products so

that countries can specialise in tasks within the framework of a more and more

knowledge-based economy345. In fact, the so-called global value chains are not chains

345 The following pages of this manual will provide a good explanation of the types of intra-industrial and inter-industrial specialisation, changing current comparative advantages in relation to global value chains, at: M. CARRERA TROYANO, D. de DIEGO ÁLVAREZ and R. HERNÁNDEZ MARTÍN: “Lección 8. Comercio internacional” in J.A. ALONSO (Dir.): Lecciones sobre Economía Mundial. Introducción al

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anymore, but networks, generally dominated by three regions (North America, Asia and

Europe).

A good example is the study made by Rivoli346, who has tracked the supply chain of a

simple t-shirt, from the cotton grown in Texas, to its manufacture in Shangai, its

printing back to the US (logos), and finally placed in the international markets, even

sent to Tanzania shredded as furniture padding. We are witness to a highly fragmented

production system where supply chains are obscure for most of the consumers; there is

almost no person who knows all steps of a product. Decisions are, in turn, distributed in

this global network. Another challenge in the internet era is data protection and the

acceleration of exchanges, where legislation is still slow to meet consumers’ problems.

On the other side, we find difficulties for small and medium producers/traders to reach

international routes. We also find a number of legal gaps despite the intense

international transactions. A recurrent cause of disagreement we should keep in mind is

the continued subsidies in OECD countries, especially in the agricultural sector. And

finally, we tend to obviate that trade is an easy victim of other political tensions, which

are immediately reflected in multilateral fora347.

Beyond the directly related human rights issues of international trade348, we can also ask

ourselves a more general question: is there a clear link between globalisation and

income inequality? Do we find a substantial relationship of cause and effect between

trade liberalisation and unemployment, especially during the current economic crisis?

Of course, we cannot give a definitive and rigorous response as far as the economists

don’t agree in this respect. Up to a certain point, economic openness promoted by the

WTO can increase income inequality to the extent networks and conditions need to be

developed to participate in and benefit from global markets. On-going adjustments are

more or less painful, even in the OECD countries, depending on their level of previous

preparation to markets instability through consistent and proficient public policies.

Desarrollo y a las relaciones económicas internacionales, Madrid 2013, Ed. Civitas, pp. 239-270, at pp. 252-260. 346 P. RIVOLI: The Traves of a T-Shirt in the Global Economy. An Economist Examines the Markets, Power and Politics of World Trade, Hoboken-New Jersey 2009, John Wiley & Sons Inc., passim. 347 An insight on the current challenges of trade: P. LOVE and R. LATTIMORE: International Trade: Free, Fair and Open?, Paris 2009, OECD Insights. 348 A comprehensive summary: OHCHR: Les droits de l’homme et les accords commerciaux internationaux. Utilisation des clauses d’exception générale pour la protection des droits de l’homme, New-York-Geneva 2005, Nations Unies.

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It goes without saying that trade liberalisation has a potential for growth and

development but is insufficient to make widely available the benefits from global value

chains: “[n] ot all countries, firms and workers are equally prepared for the adjustments

associated with more integrated markets”349. There are always particularities that make

different the situation from a country to another; nevertheless, it is strongly advisable to

maintain a sustained investment in education, skills and training, combined with social

protection systems (regardless of the chosen formula) and comprehensive labour

policies. These policies soften the adjustments to markets volatility and make it easier to

prepare the country’s workforce to changing supply-demand dynamics.

A nuanced discussion would recognize the possibilities of trade to generate growth and

development, but would point out that the benefits of increasing trade are unequally

distributed so that complementary policies are needed to accompany trade liberalisation

towards a more equitable international order. Sustainable development means,

primarily, a sustainable and respectful use of resources, not an idealistic renunciation to

use them. Consumers’ education and awareness has to be fostered, together with

capacity building initiatives in the developing countries to tackle corrupted regimes and

expand democracy and the rule of law. We lack of a holistic approach in which trade

facilitation of goods and services is oriented to make benefits accessible to the poorest

regions and people350.

When international organisations are accused of ineffectiveness and helplessness, then

again it reflects the situation of the member States as member-driven organisations.

First of all, State representatives usually have a very slight margin of negotiation when

plenary debates take place (red lines are tight). Secondly, the home countries’ situation

holds back many possible improvements, because of the multiple political and legal

systems and, in many occasions, due to lacks of good governance. Finally, even in the

best case scenario, we come across uncertain domestic determinants (from elections to a

wide range of political imponderables). In sum, a basic mismatch persists: trade is not

sufficiently mainstreamed in development strategies and, at the same time, human rights

349 OECD, WTO and WORLD BANK GROUP: Global Value Chains: Challenges, Opportunities and Implications for Policy, Report prepared for submission to the G-20 Trade Ministers Meeting, Sydney-Australia (19th July 2014), p. 9. 350 K. J. GUEST: “Exploitation Under Erasure: Economic, Social and Cultural Rights Engage Economic Globalisation, in Adelaide Law Review, 19 (1997), pp. 73-93, at pp. 79-84.

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aren’t adequately mainstreamed in trade policies. Simultaneously, the work of different

international organisations still lacks of coordination.

From an institutional perspective351, the WTO replaces GATT 1947, as the result of the

Uruguay Round (1986), culminating in the Marrakesh Agreement (1994), which entered

into force in 1995. Biannual ministerial conferences or rounds mark the agenda and

conclude binding subsequent agreements352, added to the diverse treaties on specific

trade issues. The main purpose of the organisation remains trade liberalisation through

the elimination of trade barriers, i.e., against trade tariffs and all forms of protectionism

and discrimination of products. With over 162 member-States (Afghanistan will be the

163rd member by June 2016), and 34 members considered Least Developed Countries

(LDCs), the WTO is no longer a club of developed and like-minded States, but has

evolved into a strongly multilateral forum. Perhaps the other side of the coin is the

lengthier process of negotiations and less outcomes from trade talks and rounds.

With its pros and cons, the institutional role has to be analysed in light of a prominent

particularity of the WTO compared to other international economic organisations: the

WTO is the only international economic organisation that follows the system one

member – one vote, more typical of IOs of political character. For instance, we shall

further note that WTO membership necessarily implies accepting its jurisdictional

organs and their decisions, with a unique force among international organisations (the

Dispute Settlement Body –DSB). No member of the WTO can opt-out of this settlement

mechanism. In more general terms, and despite its relatively reduced administrative

structure in Geneva (Switzerland), we can distinguish four functions of the WTO, all of

them highlighting the solidity of its institutional role353: an executive function (the

application of the Marrakesh Agreement and subsequent trade agreements), a

jurisdictional function (the administration of the DSB), a legislative function (creates

351 A concise appraisal on the most significant traits of the WTO at: L. GRADONI: “L’organizzazione mondiale del Commercio”, in L.S. ROSSI (a cura di): Le Organizzazioni Internazionali come Strumenti di Governo Multilaterale, Milano 2006, Giuffrè Ed., pp. 313-362. 352 Article IV of the Marrakesh Agreement Establishing the WTO states: “There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement”. 353 These four functions and their institutional importance could be explained in terms of implicit powers, as noted by: E. LÓPEZ BARRERO: Regulación del comercio internacional: la OMC, Valencia 2010, Tirant lo Blanch Ed., pp. 194-195.

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the institutional framework and become the forum for consecutive binding agreements

and decisions through Ministerial Rounds or the General Council’s regular meetings),

and finally, a function of participation in international relations (coordinating itself with

the IMF, WB, WHO, ILO, when appropriate, in economic and developmental issues).

Strength and flexibility equally characterise the WTO’s institutional building, the first

because of its capacity to produce major legislative changes on global trade rules, and

the second because, at the same time, it shows an undeniable capacity to adapt itself to

changing scenarios, starting with its re-founding in 1994. The increase of amicus curiae

submissions to Panels and the AB is another example of flexibility or, if we insist in

talking in negative terms, maybe an “acrobatic”354, but useful interpretation of the

Dispute Settlement Understanding (art. 13). In the pursuit of transparency and public

participation, an annual forum is organised in Geneva’s headquarters, where a good

amount of NGOs’ and CSOs’ representatives can raise their voice, though with mixed

results. In the course of 2014 Annual Forum355, a disenchanted Argentinian trade-

unionist ironically described the “cathartic effect” of a 10 hours flight to Switzerland to

raise his voice in front of “circumspect” WTO officers that will gently listen to his

complaints and regrets, on the lack of further agreements after Doha and on the

continuation of more SME-inclusive initiatives. A better trade system may be imagined,

but the fact is also that CSOs’ and NGOs’ representatives continue to attend those

meetings, which originally constituted an institutional improvement.

An additional example of evolution and institutional flexibility is the way development

has reached an unexpected place in international trade rules and debates. The

relationship between development and human rights, and their compatibility with the

WTO founding purposes, has caused an endless debate with a good amount of wishful

thinking, especially after the Doha Round introduced the so-called ‘development

mandate’ into the WTO356. The importance of Doha’s Ministerial Declaration lies in the

explicit pro-developing countries language, emphasizing that “no country should be

354 F. WEISS: “Good Governance in the Procedural Practice of the WTO”, in A. LIGUSTRO and G. SACERDOTI (a cura di): op. cit., pp. 479-493, at p. 491. 355 We wish to thank Mr. Josep Bosh, WTO officer, for his kind invitation and logistic help to attend 2014 Annual Forum. 356 Among the over-abundant literature on the Doha Round and its allegedly profound change of WTO, we shall propose a recent state of the art and the bibliography therein: D.A. GANTZ: Liberalizing International Trade after Doha. Multilateral, Plurilateral, Regional and Unilateral Initiatives, Cambridge 2013, Cambridge University Press, passim.

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prevented from taking measures for the protection of human, animal or plant life or

health, or the environment at the levels it considers appropriate”357, provided they are

made consistently with WTO agreements and they do not disguise protectionist

measures. This stronger developmental approach was later confirmed in Hong Kong

(2005) and, ever since, the organisation’s work entails a more sensitive approach to

non-trade-related issues, expressly encouraging coordination with other international

organisations to undertake capacity-building and technical assistance in development

issues. In short, the WTO’s developmental vocation at an institutional level was not

born at Doha, despite the profuse literature in this line; it could be said that it was

reinforced in 2001, but one should recall –under GATT 1947– the Enabling Clause of

1979, according to which preferential treatment could be granted to developing

countries, temporarily annulling MFN obligations, in so far as they are generalised, non-

reciprocal and non-discriminatory358. Development was, therefore, latent in the WTO’s

institutional practice well before Doha, without denying the moderate importance of

2001 Round.

Major changes have been adopted at the latest Ministerial Conference in Nairobi (15-19

December 2015), including quite significant progresses in the elimination of agricultural

subsidies. As of January 2016, developed countries immediately commit to end

subsidies on farm products; developing countries359 will do so by 2018 with a flexibility

calendar until 2023 to cover transport costs and marketing difficulties; and least

developed countries, until 2030. The financial crisis since 2008 has generated instability

in the stock markets, affecting commodities and primary products –a tragic example is

the rise of the price of corn. At the same time and paradoxically, depending on the

markets fluctuations, imports of primary products (or even food aid) from developed

and developing countries into LDCs notably increases the supply in LDCs, imbalances

their internal market and dramatically reduces the prices for local producers, creating at

the end similar problems. With food security under threat, many LDCs and some

357 It must be noted that the language follows very closely that of article XX GATT (“the protection of human, animal or plant life or health”), WTO (Doha Ministerial Conference): Ministerial Declaration, Adopted on 14 November 2001, WTO Doc. WT/MIN(01)/DEC/1, para. 6. Please, note that all official WTO documents, dispute cases and treaties cited in this section are available at www.wto.org. 358 This led to the spread of “Generalised Systems of Preferences” (GSPs). GATT: Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, 28 November 1979, GATT Document L/4903, mainly par. 3 c), 4, 5 and 8. 359 For economy of language in this section, we only refer to ‘developing countries’, which are also members of the WTO, as with ‘LDCs’ or ‘developed countries’.

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developing countries put in place public stockholding programmes (for cases of sudden

rise in prices) and tariffs (for eventual rapid import surges) to address both

problematics. Already established in Doha Round and confirmed in 2005 in Hong

Kong, a Special Safeguard Mechanism was a tool to face suddenly increasing imports,

to provide “the flexibility to self-designate an appropriate number of tariff lines as

Special Products guided by indicators based on the criteria of food security, livelihood

security and rural development”, and “based on import quantity and price triggers”360.

For the moment, Nairobi’s package does not provide a definitive solution in this regard,

but provisionally allows Public Stockholding for Food Security Purposes, as well as the

extension of the Special Safeguard Mechanism while negotiations continue, that means

at least until the next negotiation round in 2017. Finally, there are very concrete

successes for LDCs, mainly sub-Saharan African countries: the ministerial conference

approved preferential rules of origin to determine when a product is ‘made in an LDC’ –

products can use foreign materials provided they constitute less than 75% of the final

value of the product; also from 1 January 2016, cotton from LDCs will have quota-free

and duty-free access to the markets of developed countries and those of developing

countries willing to do so, while it foresees the immediate prohibition of cotton

subsidies in developed countries and the progressive prohibition in developing ones. A

different Ministerial Decisions extended the waiver on MFN obligations under the

GATS to allow preferential treatment to LDC services and service suppliers for an

additional period of 15 years (until 2030), with a view to address the historic delay of

these countries in trade in services.

It is early to know if Nairobi is a turning point, or even the “death of Doha”361 and a

shift towards a more pragmatic, consensus-based and item-by-item approach so as to

ensure delivering results. The link between trade and development might receive a new

long-term impulse because of 2008 crisis362. There was an undeniable need to unblock

the remaining issues of Doha’s Work Program and to reinforce or revitalise the global

360 WTO (Hong Kong Ministerial Conference): Ministerial Declaration, Doha Work Programme, Adopted on 18 December 2005, Hong Kong, WTO Doc. WT/MIN(05)/DEC, para. 7. 361 S. DONNAN: “Trade talks lead to ‘death of Doha and birth of new WTO”, in Financial Times, 20 December 2015, accessed online at: http://www.ft.com/cms/s/0/97e8525e-a740-11e5-9700-2b669a5aeb83.html#axzz3vdqE8qHB. 362 R. BERMEJO GARCÍA and R. GARCIANDÍA GARMENDIA: “La crisis financiera internacional y sus consecuencias sobre el sistema comercial multilateral de la Organización Mundial del Comercio”, in D.J. LIÑÁN NOGUERAS (Dir.) and A. SEGURA SERRANO (Coord.): Las crisis políticas y económicas: nuevos escenarios internacionales, Madrid 2014, Tecnos Ed., pp. 105-128, at pp. 123-127.

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institutional role of the WTO, moreover taking into consideration the spread of regional

trade arrangements outside the WTO and, very prominently, the US initiatives with the

Trans-Pacific Partnership and the parallel Trans-Atlantic Trade and Investment

Partnership with the EU (still in negotiation). Regardless of future changes, it can be

concluded that this institutional profile facilitates the WTO substantive contribution,

though some natural limitations remain.

WTO’s substantive contribution

On the substance, there are numerous human rights’ aspects of international trade and

there are open possibilities to introduce non-trade-related issues into the WTO practice.

Similarly to what has been argued with regard to development and its origins well

before the Doha Round, the “GATT-WTO legal regime already harbors a number of

putatively human rights-based principles”363, as noted by Prof. David Kinley referring

to non-discrimination between trading nations, the inclusion of intellectual property

rights after TRIPS Agreement, and the significant precedent of article XX of GATT

1947 as an exception clause.

Precisely article XX of GATT has inspired the rest of general exception clauses in the

following multilateral trade agreements, in order to allow measures “necessary to

protect public morals”, “necessary to protect human, animal or plant life or health”,

“relating to the products of prison labour”, or “imposed for the protection of national

treasures of artistic, historic or archaeological value”. Article XIV of GATS foresees,

mutatis mutandis, the same exceptions, to which it adds “the privacy of individuals” and

“safety”. Article XXIII of the Public Procurement Agreement includes in its first

paragraph an exception for national security reasons and, in the second comma, the

general exception clause according to which “nothing in this Agreement shall be

construed to prevent any Party from imposing or enforcing measures: necessary to

protect public morals, order or safety, human, animal or plan life or health or

intellectual property, or relating to the products or services of handicapped persons, of

philanthropic institutions o of prison labour”. Article 27(2) of TRIPS assumes that, if

“necessary to protect ordre public or morality, including to protect human, animal or 363 D. KINLEY: “Corporate Social Responsibility and International Human Rights Law”, in R. MULLERAT (Ed.): op. cit., pp. 231-241, at p. 235.

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plan life or health or to avoid serious prejudice to the environment”, inventions may be

excluded from patentability. TRIPS Agreement also establishes that intellectual

protection “may be waived by a Member in the case of a national emergency or other

circumstances of extreme urgency or in cases of public non-commercial use” even

though in these situations “the right holder shall […] be notified as soon as reasonably

practicable”. Article 2(2) of the TBT Agreement further recognises “legitimate

objectives” in a broad manner since it makes a non-exhaustive list: “Such legitimate

objectives are, inter alia: national security requirements; the prevention of deceptive

practices; protection of human health or safety, animal or plant life or health, or the

environment”. Finally, article 2(2) of the SPS Agreement limits sanitary and

phytosanitary measures to “the extent necessary to protect human, animal or plant life or

health” and “based on scientific principles, and is not maintained without sufficient

scientific evidence”, obviously complicating our debate.

Compared to investment treaties and contracts, the language of WTO Agreements

suggests, at first sight, a more embracive relationship between trade regulation and non-

economic concerns, but this optimism has to be balanced with the organisation’s

practice in the field. Continuing similarly to investment cases, we shall first assess the

linkage to general international law and, in a second stage, examine those “open

windows” for human rights. Besides these latent human rights aspects in the exception

clauses cited above, it is the Dispute Settlement Body (DSB) who has opened those

windows, sometimes in the form of a panel’s report and, in other occasions, the

Appellate Body (AB), which is the last instance in the dispute settlement procedure as

foreseen by the Dispute Settlement Understanding (DSU).

For instance, many disputes support our integrationist approach, against the

fragmentation of International Law through allegedly autonomous self-contained

regimes, so we may only mention a few famous cases chosen for their expressiveness.

The Appellate Body (AB) promptly clarified that the General Agreement “is not to be

read in clinical isolation from public international law” and directly cited the Vienna

Convention on the Law of Treaties364, when interpreting the scope of article XX GATT

(commas b) and g)). From the perspective on general international law, the AB has

further expressed that its work has to be “faithful to the ‘customary rules of

364 WTO (AB): United States – Standards for Reformulated and Conventional Gasoline, Report of the Appellate Body, 29 April 1996, WTO Doc. WT/DS2/AB/R, p. 17.

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interpretation of public international law’”, and very eloquently added: “WTO rules are

not so rigid or so inflexible as not to leave room for reasoned judgements in confronting

the endless and ever-changing ebb and flow of real facts in real cases in the real

world”365, thus sustaining an evolving and progressive development of International

Law, closer to the material reality366. In the same vein, the AB has aligned itself with

the “contemporary concerns of the community of nations about the protection and

conservation of the environment”, implicitly recognising that there are common

interests of the international society, such as “sustainable development”, as included in

the preamble of GATT 1994. Moreover, it has adopted a progressive approach to

evaluate the meaning of ‘natural resources’ in art. XX(g) GATT, a term that “is not

‘static’ in its content or reference but is rather ‘by definition, evolutionary’”367. WTO

Agreement should not be interpreted literally, but finalistically in accordance with the

preamble of WTO Agreement, which “gives colour, texture and shading to the rights

and obligations”368.

Bearing in mind this framework, recourse to exception clauses and public international

law is obviously not unconditional. The first paragraph of article XX GATT details the

chapeau under which it can be used. In sum, the reasoning has two steps: the measures

at the origin of the dispute must fall within the scope of the exception clauses; and

secondly, it must also be demonstrated that they are consistent with the chapeau to

avoid a misuse or abuse of article XX GATT.

It is worth citing two precedents under GATT 1947. In Thailand-Cigarettes the Panel

used this test on equivalent domestic measures to prove that Thailand’s prohibition of

American cigarettes disguised a protectionist initiative to benefit local production. The

test must assess that measures are “necessary” to protect a public interest enshrined in

art. XX GATT, i.e., “only if there were no alternative measure consistent with the

General Agreement, or less inconsistent with it”, and “provided they do not thereby

accord treatment to imported products less favourable than that accorded to ‘like’

365 WTO (AB): Japan – Taxes on Alcoholic Beverages, Report of the Appellate Body, 4 October 1996, WTO Doc. WT/DS11/AB/R, p. 31. 366 This coincides entirely with our methodological approach, as explained in the introduction. 367 WTO (AB): United States – Import Prohibition of certain Shrimps and Shrimp Products, Report of the Appellate Body, 12 October 1998, WTO Doc. WT/DS58/AB/R, para. 129 and 130 (quotes). 368 Ibíd., para. 155.

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products of national origin”369. Thailand-Cigarettes case was also a landmark because

of the important submission by the WHO, an example of coordination between

international organisations. Also under GATT 1947, in a case between the US and

Canada on the protection of tuna in line with the International Convention on the

Conservation of Atlantic Tuna, the Panel decided to adopt, without consequences, its

report despite the previous amicable conciliation between the parties outside the

DSB370. The Panel observed that trade exceptions based on environmental concerns are

not allegeable to hide other interests –in that case, the US non-recognition of Canadian

sovereignty over tuna in its Atlantic coastal waters, initiating the WTO dispute when

Canada seized US-flagged fishing vessels371.

After 1995, the WTO has continued this practice while further detailing the exact

conditions laid down by the chapeau of art. XX GATT. In US-Gasoline, the AB stated

that the import restrictions had no equivalent internal measures in the US; therefore,

though clean air may fall within the scope of art. XX, the US failed to demonstrate that

the measure adopted was consistent with equivalent measures at a domestic level, and

the AB concluded that the US put forward biased environmental purposes to actually

grant privileges to internal producers of gasoline372. When dealing with Japan’s higher

taxes for foreign alcoholic beverages, alleging public health concerns, the AB similarly

ruled that, though possibly falling under the scope of art. XX GATT, the measure

unfairly discriminated foreign like-products, in comparison to local alcoholic

beverages373. In relation to the protection of sea turtles threatened by shrimp fishing

methods, the AB finally decided that import restrictions of shrimps put in place by the

369 GATT (Panel): Thailand – Restrictions on Importation of And Internal Taxes on Cigarettes, Report of the Panel, 7 November 1990, Doc. DS10/R – 37S/200, para. 75. 370 In 1994, a different case (Dolphin) on same ground (tuna fishing and the protection of dolphins), but between the US and Mexico was also conciliated and the GATT Panel decided not to adopt the Report DS29/R of 16 June 1994. 371 Besides, the US had not adopted similar measures in its internal market. “The Panel could therefore not accept it to be justified that the United States prohibition of imports of all tuna and tuna products from Canada […] had been made effective in conjunction with restrictions on United States domestic production or consumption”, and that “prohibition of imports […] had been imposed in response to Canadian arrest of United States vessels fishing […] ”. GATT (Panel): Conciliation. United States – Prohibition of imports of tuna and tuna products from Canada, Report of the Panel, 22 February 1982, Doc. L/5198 – 29S/91, para. 4.12 and 4.13. Again, trade is an easy victim for political conflicts. 372 “The chapeau by its express terms addresses, not so much the questioned measure or its specific contents as such, but rather the manner in which that measure is applied. It is, accordingly, important to underscore that the purpose and object of the introductory clauses of article XX is generally the prevention of ‘abuse of the exceptions’ […]”. WTO (AB): US – Gasoline…, p. 22 (supra, footnote 364). 373 “Shochu and vodka are like products and […] Japan, by taxing imported products in excess of like domestic products, is in violation of its obligations under Article III [GATT]”, WTO (AB): Japan – Alcoholic Beverages…, p. 32 (supra, footnote 365).

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US fell within the scope of art. XX (g), were consistent with equivalent internal

measures, but were too “rigid” and, at the end, extraterritorially imposed an excessively

concrete fishing method and a particular certification scheme, which went beyond a

reasonable, environmentally finalistic requirement to allow third States’ imports of

shrimps or shrimp products374.

In all these cases, States are unsuccessful in alleging an exception under article XX. But

in the practice of the DSB it starts to become clear that there is no fear to use general

international law, through the Vienna Convention on the Law of Treaties, and even

including soft law instruments from other organisations to clarify, in a particular

situation, the link to other International Law regimes and principles375. It has been said

that a weakness of the WTO system is this process that imposes on States a sort of

“probatio diabolica”376 to justify human rights exceptions. But we do not think it is a

problem of the WTO dispute settlement mechanism. For example, the assessment of

“necessity” is more flexible that what it seems. According the DSB, the necessity to

protect public goods “is not limited to what is indispensable”, given that it constitutes a

“continuum”377 with different degrees of necessity, depending on the proportionality

between the measures imposed and the ends pursued. In reality, it looks more like a

triangle according to which the DSB carries a process of “weighing and balancing”378 of

three factors: the measures adopted, the ends pursued, and their degree of WTO-Law

consistency. When a more WTO-consistent measure is reasonably available, it is the

one that States should put in place. As noted with investment disputes, human rights are

not a shortcut for avoiding other international obligations without the due justification.

If States don’t satisfy this test, it is because most of the times we find hidden purposes

374 “The United States did not permit imports of shrimp harvested by commercial shrimp trawl vessels using TEDs [methods] comparable in effectiveness [in protecting sea turtles] to those required in the United States”. WTO (AB): US – Shrimps…, para. 165. 375 “En conjunto, la práctica examinada evidencia que […] han tenido en cuenta muy diversas normas internacionales en la interpretación de los acuerdos abarcados […] la inclusión de instrumentos de soft-law que ha efectuado el Órgano de Apelación, particularmente en el asunto Estados Unidos – Camarones, debe ser ponderada como una operación conjunta para determinar, esencialmente, el contenido del Derecho Internacional general en la materia, sin tomar de forma aislada las concretas referencias a uno u otro instrumento”. X. FERNÁNDEZ PONS: La OMC y el Derecho Internacional. Un estudio sobre el sistema de solución de diferencias de la OMC y las normas secundarias del Derecho internacional general, Madrid – Barcelona 2006, Marcial Pons Ed., pp. 244-245. 376 A. ODENINO: “Soluzione delle controversie nell’OMC e valori non commerciali”, in A. COMBA (a cura di): op. cit., pp. 153-187, at p. 179. 377 WTO (AB): Korea – Measures affecting imports of fresh, chilled and frozen beef, Report of the Appellate Body, 11 December 2000, WTO Doc. WT/DS169/AB/R, para. 161 (at p. 49). 378 Ibíd., para. 164.

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to influence international trade or other non-trade related political and economic issues,

which do not respond to genuine human rights’ concerns.

A paradigmatic (and unique) case is precisely EC-Asbestos, where the then European

Communities are able to show that asbestos prohibition is fully justified step by step:

first, it falls within the scope of article XX GATT (in three areas: health, labour law and

the environment); secondly, it complies with the conditions of the chapeau in the sense

that measures adopted are proportional enough (to the ends pursued), necessary (a

sufficient level of risk is shown) and non-discriminatory (they are applicable to the

same product wherever it may come from, including domestic equivalent measures).

Given that this test usually requires a variable level of scientific evidence, we cannot but

praise the Panel’s acknowledgement that “it is not its function to settle a scientific

debate” –that would amount to put an excessive burden of proof on defendants, but to

“determine whether there is sufficient scientific evidence to conclude that there exists a

risk for human life or health”379. The Panel’s decision was upheld by the Appellate

Body in 2003 modifying some aspects of the reasoning but without touching on its

essential structure. The evidence before the Panel “tend[ed] to show” that asbestos was

“a risk to health rather than the opposite” and “[a] ccordingly, a decision-maker

responsible for taking public health measures might reasonably conclude that the

presence of chrysotile-cement products posed a risk”380. Interestingly, the Panel adopts

this decision taking into consideration ILO Convention 162 on asbestos and the WHO

list of carcinogenic products, being the first a hard law instrument and the latter a soft

law guidance. Besides, we consider that “risks” are quite pragmatically interpreted by

the Panel: there is no need to wait “until scientific certainty, which is often difficult to

achieve, had been established over the whole of a particular field before public health

measures could be implemented”381. This confirmed by the way the rather preventive

approach of the EC-EU and its member States382. We infer that exceptions are perfectly

defensible under the GATT’s notion of “risk”, if WTO-members succeed in passing the

test.

379 WTO (Panel): European Communities – Measures affecting asbestos and asbestos-containing products, Report of the Panel, 18 September 2000, WTO Doc. WT/DS135/R, para. 8.181 and 8.182. 380 Ibíd., para. 8.193. 381 Ibíd., para. 8.221. 382 We further discuss this problematic on the EU’s preventive approach and the legitimation of scientific expertise in Chapter IV, at pp. 257-259.

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This powerful and sound interpretative methodology to approach the GATT has been

extended to other WTO Agreements by the DSB, progressively detailing the

components of the chapeau, which is said to be just “but one expression of the principle

of good faith […] , the application widely known as the doctrine of abus de droit,

prohibit[ing] the abusive exercise of state’s rights”383. Of course, in the area of

preventive human rights, grey zones are frequent and make it more necessary than ever

to build solid defence strategies based on the WTO’s own practice.

With regard to other multilateral trade agreements, the practice under GATT and the

general logic explained so far, have been confirmed and extrapolated, mutatis mutandis.

Under the SPS Agreement, the AB clarified that, in connection to risk assessments and

sanitary measures, preventive measures or, in general, a “precautionary principle” is not

part of customary international law yet (there is no consensus in that regard). Hence,

prevention cannot “override”, by itself, other provisions of international trade

agreements384. This is why a test is also needed to further analyse if preventive

measures are justified under the exception clauses –the door is moderately opened.

The SPS Agreement is, moreover, a good example of how the WTO promotes

coordination between international organisations, recognising their work on standards,

guidelines and recommendations, in relation to which States have room to establish

higher levels of sanitary measures (art. 3.3). Articles 3.1 and 3.2 of the SPS Agreement

establish a presumption of consistency with WTO-Law for measures taken in line with

international soft law instruments (guidelines and standards). In principle, the logic rule

goes: if A then B, no-A means no-B; but in social sciences and legal studies this is not

necessarily the case. Indeed, the AB has ruled that the presumption of consistency for

measures following international standards does not mean that measures taken outside

those standards are presumed to be inconsistent. Otherwise, the legal value of these soft

law guidelines would be excessive and defendants would have an unfair burden of

proof. There may be sanitary measures, not already standardised at an international

level, which are perfectly consistent with the SPS Agreement or, perhaps, be justifiable

under an exception clause. That’s why claimants still have the duty to construct a

sufficiently solid prima facie case, even when SPS measures are outside international

383 WTO (AB): US – Shrimps…, para. 158. 384 WTO (AB): EC – Measures concerning meat and meat products (Hormones), Report of the Appellate Body, 16 January 1998, WTO Doc. WT/DS48/AB/R, para. 121-125.

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standards; only afterwards, it is the defendants’ turn to argue their case385. In other

words, as in EC-Hormones, the fact that the EC measures did not follow a specific

international standard did not “absolve” the US and Canada from showing there is a

prima facie case of violation of the SPS Agreement.

Unfortunately, the problem for the EC came later, to demonstrate a sufficient risk

assessment: in that case, we rather argue that the EC’s priority should have been to put

political pressure on other international organisations (mainly the ISO and WHO) in

order to create guidelines on hormones and, in that process, influence its outcome so as

to satisfy the EC’s sanitary concerns (indirectly affecting SPS trade rules). Put in other

words, the SPS Agreement is probably the best example of “soft law instruments

hardening up”386 through WTO’s practice, and this indirect way to influence SPS trade

rules shouldn’t be undervalued. Concerning articles 2.4 and 2.5 of the TBT Agreement,

also on international standards, in Tuna Dolphin II the AB has ruled that standards

sourced from other organisations still have to be legitimate and, at times, a private

standard might be “more legitimate” than a public one, or vice versa depending on the

case, on its procedural foundations and technical aspects: CSR can play a prominent

role in the harmonization of private and public, hard and soft instruments, even within

trade disputes387.

In sum, to simultaneously influence other standard-setting international organisations,

private and public, can deem to be a wiser complementary strategy, like in a more

recent WTO-complaint by the US on an EU ban of poultry meat treated with certain

chemicals to reduce microbes –still pending388. It will also be interesting to see the

evolution of case DS-495, where a Panel established in September 2015 will have to

analyse the lawfulness of Korean extra-requirements on Japanese food products 385 In this important aspect, the AB reversed the Panel’s previous conclusions: “Only after such a prima facie determination had been made by the Panel may the onus be shifted to the European Communities to bring forward evidence and arguments to disprove the complaining party’s claim”. Ibíd., para. 101-109 (quotes at para. 108 and 109). 386 M. GEBOYE DESTA: “GATT/WTO Law and international standard: an example of soft law instruments hardening up?”, in A.K. BJORKLUND and A. REINISCH (Eds.): op. cit., pp. 148-191, at pp. 160-166 (these pages also discuss EC-Hormones case). 387 C. GLINSKI: “Competing Transnational Regimes under WTO Law”, in Utrecht Journal of International and European Law (Special Issue: Legal Aspects of Corporate Social Responsibility), Vol. 30 No. 78 (2014), pp. 44-66, at p. 63. 388 Dispute No. DS389. The consultation phase has ended and third countries have reserved their right for third-party submissions. For information purposes see the US Trade Representative website: https://ustr.gov/issue-areas/enforcement/dispute-settlement-proceedings/european-communities-%E2%80%93-certain-measures-affe and the WTO website https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds389_e.htm

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regarding the presence of radionuclides after the nuclear accident at Fukushima back in

2011. We will finally have to follow up the EU’s complaint on Russian import

restrictions of live pigs and pork products, alleging concerns on African swine fever

(dispute No. DS- 475), though one would hypothesize that the Ukrainian crisis had an

influence –it chronologically coincided, in parallel to similar problems with European

fruit products usually exported to the Russian Federation.

In relation to the GATS Agreement, art. XIV a) was specifically addressed in US-

Gambling: when there are concurring international obligations, States’ good faith is

demonstrated when they opt for the “least inconsistent” and “reasonably available”

measure in terms of WTO law –just as with investment protection389. In that case, the

US restrictions of internet-based gambling services, on the ground of public order, fell

within the scope of the exception clause, but were found to be partially discriminatory

because, in the particular area of horse racing, only domestic suppliers were exempted

from the restrictions enacted, unlike foreign betting companies390.

A different significant example is when former PM of Brazil Lula da Silva used the

expression “a national interest” to define the fight against HIV/AIDS and, accordingly,

find inapplicable patent legislation under the flexibility of article 31 of TRIPS

agreement391, in coordination with the World Intellectual Property Organisation, the

World Health Organisation and the United Nations High Commissioner for Human

Rights. This is an interesting case where we detect the important role of and interaction

between international organisations and the possibilities they might offer. For good or

for bad, one year after having filed a WTO complaint against Brazil, the US dropped it,

so no Panel could finally discuss the question392. There is a very well-known debate

between the access to medicines and the respect of intellectual property rights, which

389 WTO (AB): United States – Measures affecting the cross-border supply of gambling and betting services, Report of the Appellate Body, 7 April 2005, WTO Doc. WT/DS285/AB/R, para. 307. 390 The discrimination lied in the fact that “only domestic suppliers of remote betting services for horse racing [were exempted] from the prohibitions in the Wire Act, the Travel Act and the IGBA”. Ibíd., para. 369. 391 S. WALKER: The TRIPS Agreement, Sustainable Development and the Public Interest: Discussion Paper, Cambridge-Gland 2001, IUCN, xiv + 60 pp, passim. 392 WTO Reporter: “United States Drops WTO Case Against Brazil Over HIV/AIDS Patent Law”, 26 Junes 2001. A summary of Brazil’s arguments and the wider problematic, for purely informative purposes, see the submission of the Permanent Mission of Brazil to the WTO on behalf of Bolivia, Brazil, Cuba, China, Dominican Republic, Ecuador, India, Indonesia, Pakistan, Peru and Sri Lanka, Thailand and Venezuela: WTO (Council for TRIPS): Paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health, 24 June 2002, WTO Doc. IP/C/W/355. Also see: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds199_e.htm

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have both a human rights’ dimension393: to balance the moral and economic rights of

creators and inventors, on one hand, and the access to the benefits of science for the

effective realisation of social rights, on the other hand. After the Doha Declaration on

the TRIPS Agreement and Public Health, the General Council adopted a waiver of art.

31 for “eligible member States”394, mainly LDCs, who had poor pharmaceutical

capacities, allowing them to issue “compulsory licences” to ensure access to certain

medicines under clear conditions and supervision of the Council for TRIPS. In the

meantime, Nairobi’s Ministerial Conference has agreed to extend the freezing of non-

violation and situation complaints dealing with TRIPS Agreement, at least until 2017

when the ministerial conference will re-examine this issue.

Of course, these actions do not solve the causes of pharmaceutical shortages for

developing and least developed countries, but awareness is increasingly widespread395.

Apart from compulsory licences, a different way to obtains medicines at better prices

for developing countries and LDCs is “parallel imports”: once the patent owner

consents to introduce a product in a particular market, it is understood that he loses

control over its commercialisation and it can be resold to a third country wishing to

benefit from a lower price, instead of buying it in the international markets. Parallel

imports are not contemplated by TRIPS and simply constitute a tricky (though

legitimate) circumvention of the treaty, whereas compulsory licences are limitedly

justified under art. 31. These two flexibility strategies under TRIPS (compulsory

licences and parallel imports) are, however, unlikely to bring about long-term solutions,

unless we really solve the twofold root of the problem396: transfer of technology and

capacity building together with further investigation on ‘neglected diseases’.

A very frequent problem of TRIPS is the production of generic medicines and the

patent’s owners enjoyment of their rights, while “both society and the scientist have a

393 A human rights approach to intellectual property by A. R. CHAPMAN: “Core obligations related to ICESCR Article 15 (1)(c)”, in and A. R. CHAPMAN and S. RUSSEL: Core obligations: Building a Framework for Economic, Social and Cultural Rights, Belgium 2002, Intersentia Ed., pp. 305-331, at pp. 315 ff. 394 WTO (General Council): Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, Decision of 2 September 2003, WTO Doc. WT/L/540. 395 D. ZAPICO ALONSO: “La regulación de los derechos de propiedad intelectual y el acceso a medicamentos esenciales”, in A. EMBID IRUJO (Dir.): Comercio internacional y derechos humanos, Pamplona 2007, Aranzadi Ed., pp. 175-216, at pp. 197-200. 396 M. ORTEGA GÓMEZ: Patentes farmacéuticas y Países en Desarrollo, Madrid 2011, Difusión Jurídica Ed., pp. 85-87.

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legitimate interest”397 in using discoveries before the expiration of the 20-year patent

term. In 1997 the European Communities filled a complaint against two aspects of a

Canadian patent regulation, mainly affecting pharmaceutical products. In the first place,

Canada had allowed eventual competitors of a patent owner to initiate the process of

obtaining the relevant governmental permits before the patent term had expired, so that

competitors could sell their products immediately after the end of the patent. The EC

alleged that governmental regulations of pharmaceutical products actually reduce that

20-year exclusivity, as a matter of fact circa 40/60% shorter, so that the marketing

approval process for competitors shouldn’t be initiated before the exact end of the

patent term, alleging it would be inconsistent with article 27 TRIPS. However, the Panel

rejected this reasoning alluding to the above-cited “legitimate interests”, understood as a

broader notion than mere ‘legal interests’398.

As for the delays generated by public marketing licences, the Panel reframes or

refocuses it on whether it is discriminatory or not. According to the Panel, all producers

are subject to such reduction of the “effective period of market exclusivity”, so it is not

discriminatory –implicitly confirming that the fact of alleging an exception clause does

not liberate us from showing it is not used in a discriminatory manner. Many States,

acting as third parties, were in favour of “granting compensatory patent term

extensions” due to the regulatory delay that reduces de facto the effective period of

patent exclusivity. However, the Panel interestingly noted there was still no

international consensus with regard to such a compensatory extension of the patent

term399, partially benefiting the prompter placing in the market of generic medicines

397 WTO (Panel): Canada – Patent Protection of Pharmaceutical Products, Report of the Panel, 17 March 2000, WTO Doc. WT/DS114/R, para 7.69. 398 “In sum, after consideration of the ordinary meaning of the term “legitimate interests” as it is used in Article 30, the Panel was unable to accept the EC’s interpretation of that term as referring to legal interests pursuant to article 28.1. Accordingly, the Panel was unable to accept the primary EC argument with regard to the third condition of Article 30. It found that the EC argument based solely on the patent owner’s legal rights pursuant to Article 28.1, without reference to any more particular normative claims of interest, did not raise a relevant claim of non-compliance with the third condition of Article 30”. Ibíd., para 7.73 399 “On balance, the Panel concluded that the interest claimed on behalf of patent owners whose effective period of market exclusivity had been reduced by delays in marketing approval was neither so compelling nor so widely recognised that it could be regarded as a “legitimate interest” within the meaning of Article 30 of the TRIPS Agreement. Notwithstanding the number of governments that had responded positively to that claimed interest by granting compensatory patent term extensions, the issue itself was of relatively recent standing, and the community of governments was obviously still divided over the merits of such claims. […] The Panel believed that Article 30’s “legitimate interests” concept should not be used to decide, through adjudication, a normative policy issue that is still obviously a matter of unresolved political debate”. Ibíd., para. 7.82.

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once expired the patent at stake. Nonetheless, the Panel concluded against the second

question of the dispute inasmuch as it considered inconsistent with art. 28.1 and 30 the

Canadian regulatory exception that allowed manufacturing and stockpiling patented

products, regardless of the fact that they would not be sold before the expiry of the

patent –the Panel applied here the principle of effectivity and understood that such

exception substantially contravenes the patent’s owner exclusionary rights400. But

initiating the administrative procedure to obtain the regulatory permits for a generic

medicine, before the end of a patent, is then compatible with TRIPS Agreement. In sum,

the third flexibility strategy under TRIPS (the so-called ‘Bolar exception’ or ‘regulatory

exception’), as seen in the Canadian case, was the result of WTO’s jurisprudence. This

‘regulatory exception’ passed the test of the Panel and the time lag caused by

governmental permits can be circumvented: potential competitors can accelerate the

merely bureaucratic procedures even before the patent expires, so that generic medicines

can be placed in the market immediately after the expiration of the patent.

TRIPS Agreement is certainly a curious example of how essentially private interests

(patents and patent owners’ rights) are protected by States in an international dispute

resolution mechanism against other States’ regulations, other than traditional diplomatic

protection, as a parallel road to the Paris Convention for the Protection of Industrial

Property and the Berne Convention for the Protection of Literary and Artistic Works,

and accepting rather loose connections401 between the origin of corporations involved

and the country that decides to take over and bring the issue to the attention of the DSB.

In conclusion, the reasoning started with article XX GATT and has progressively been

detailed through the DSB’s practice, now extended to other agreements (GATS, TRIPS,

SPS…) and their respective exception clauses. The use of an exception clause has to be

justified and is not unconditional. The WTO-consistency test has three basic elements:

measures shall be necessary, proportional and non-discriminatory, which are not new or

surprising concepts in international tribunals or arbitrage seats against the abuse or

misuse of States’ prerogatives. We have also noted that the DSB has a perfectly

sharable approach to different situations and cases: realistic –close to the concrete 400 “[T] he rights of the patent owner are generally viewed as a right to prevent competitive commercial activity by others, and manufacturing for commercial sale is a quintessential competitive commercial activity, whose character is not altered by a mere delay in the commercial reward”. Ibíd., para. 7.35. 401 C. WADLOW: “The Beneficiaries of TRIPs: Some Questions of Rights, Ressortissants and International Locus Standi”, in The European Journal of International Law, Vol. 25 No. 1 (2014), pp. 59-82, at p. 74.

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factual evidence; explicitly integrative –no fear to public international law; and open to

progressive interpretations of treaties and agreements –in the light of preambles, the

travaux préparatoires, customary international law in other fields like the environment

or health, and the practice of other international organisations (even soft law

instruments). It starts to be clear that it doesn’t seem difficult to show that a particular

measure falls within the scope of exception clauses; problems rather arise when it

comes to demonstrate that measures are sufficiently justified. It does not seem to us an

insuperable burden of proof, provided States duly manage their overlapping and

concurring international obligations in good faith. It is now the responsibility of

member-States to effectively and reasonably use these open windows: it will depend on

how they use the inherent multilateral, consensual and evolutionist402 genetics of WTO

Law.

2.3 Soft law and the potential of international organisations

2.3.1 Soft law and corporate human rights respect

Notwithstanding the fact that we discuss in detail the value of soft law through the

European Union’s practice in Chapter IV, we shall make some initial remarks to serve

as a starting point. The debate on soft law hides the last dichotomy we did not address

in the first chapter, i.e., the one opposing mandatory and voluntary schemes. In the first

chapter, we addressed the problems of the ‘treaty route’, both in theory and practice, but

that problematic is the consequence of a previous choice: hard law vs. soft law, which

implies more theoretical (if not ideological) questions. Of course, hard law enthusiasts

will immediately identify themselves with the defence of a new international treaty on

business and human rights. And soft law supporters will say that everything has to be

402 “[T] he possibilities of collectively adopting subsequent interpretations, setting up new standardising bodies, and adapting the interpretation of WTO Law in response to the practice of members and the evolution of international law, allow the development of WTO Law at the margins, by a majority of members and with considerably low formal requirements. As a result, the mechanisms of multilateral law-making allow members to produce incremental adjustments to WTO Law while preserving its coherence as a legal system”. G. VIDIGAL: “From Bilateral to Multilateral Law-making: Legislation, Practice, Evolution and the Future of Inter Se Agreements in the WTO”, in The European Journal of International Law, Vol. 24 No. 4 (2013), pp. 1027-1053, at p. 1053.

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left to companies’ discretion because mandatory schemes would place an “unwarranted

burden on business”403.

It is often heard that corporate social responsibility is only about soft law; that it

responds to a negative feudalisation caused by global capitalism: our “age of neo-

medievalism” would have diversified the sources of power, legitimacies and norms,

thus creating soft instruments aimed at clarifying some private (corporate) duties –

always softly404. In practice, we have found both voluntary and mandatory aspects and,

contrary to a widespread belief, minimum legal requirements are also part of CSR,

ideally to go beyond them so as to achieve “best practices” –but always within the

framework of legal compliance. In sum, in view of the current international practice,

what we actually infer from our analysis is an interaction between both hard and soft

law instruments in the area of corporate human rights respect.

This mixture responds to the fact that mere self-regulation is not sufficient after having

detected many traps and contradictions. For example, in the occasion of the 2014

Winter Olympic Games in Sochi (Russian Federation), many companies could not do

anything to avoid sponsoring the games –contrariwise, it was part of their ‘CSR’,

despite the increasing unease in relation to widespread discrimination in Russia on the

grounds of sexual orientation, affecting also some athletes405. We have mentioned other

risks of CSR, like ‘blue washing’ –when the UN logo is unduly used in the Global

Compact by poor performing companies, or ‘green washing’ when only a small

percentage of ‘green providers’ hides essentially the same bad performance in supply

chains, phenomena that have been investigated in many areas406. The many examples

available have led to some authors to think that CSR is just about voluntary and

403 H. CHOUDHARY: “Mandatory Corporate Social Responsibility: An Unwarranted Burden on Business”, in European Company Law, Vol. 10 No. 4/5 (2013), pp. 156-160, passim. 404 C. M. BAILLET: “What is to become of the human rights international order in an age of neo-medievalism?”, in C.M. BAILLET (Ed.): Non-State Actors, Soft Law and Protection Regimes. From the Margins, Cambridge 2012, Cambridge University Press, pp. 95-124, at pp. 119-123. 405 J. van DETTA: “Sexual Orientation, Human Rights and Corporate Sponsorship of the Sochi Olympic Games: Rethinking the Voluntary Approach to Corporate Social Responsibility”, in Utrecht Journal of International and European Law, Vol. 30 No. 78 (2014), pp. 99-124. 406 Suffice the example of many tobacco produces apparently recurring to green supply chains to actually hide the fact that most of purchases still come from previous circuits involved in child labour and tobacco-related deforestation: M. OTAÑEZ and S.A. GLANTZ: “Social Responsibility in Tobacco Production? Tobacco Companies’ use of green supply chains to obscure the real costs of tobacco farming”, in Tobacco Control, Vol. 20 No. 6 (November 2011), pp. 403-411.

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“ceremonial commitments” seasoned with an institutionally “organised hypocrisy”407,

maintaining the imbalances between developed countries and the rest of the world. But

the CSR movement has surely served to reveal these contradictions to a wide public

and, from a social perspective, more and more people think that “benefits that come

from human rights violations are illegitimate, if not directly illegal”408 –extrapolating

the so-called doctrine of the fruit of the poisoned tree. Shall we recall SPP vs. Egypt

recognising lucrum cessans only until the entry into force of the UNESCO Convention

on Wold Heritage, after which any benefit would have been internationally illegal; as in

other investment and trade situations analysed in the precedent section in terms of ‘open

windows’. For us, the obvious deficits and traps of CSR are not enough to totally reject

it; given that we have defined it as a human rights strategy mixing hard and soft law

instruments, our conclusion is on its relative usefulness and certain potential;

nevertheless, it is clear that a merely voluntary approach does not seem sufficient.

More generally, the expansion of soft international law is frequently criticised in terms

of a feudalisation of global regulation, to primarily serve private interests, a sort of post-

modern lex mercatoria409. But this argument simply forgets that CSR and soft

international norms are nothing new under the sun. Besides, they are not necessarily

negative: the so-called “Incoterms” is a set of international trade terminology created in

1936 by the International Chamber of Commerce, also responsible for the “Uniform

Customs and Practices for Documentary Credits”, operative in 175 countries.

Continuing with the banking sector, we shall also cite the “Basel III Guidelines” on risk

management formulated by the Committee of the Bank for International Settlements (a

mix private-public institution whose members are central banks, but not exactly an

intergovernmental one); the International Financial Reporting Standards are the product

of another private institution (the International Accounting Standards Board). There are

examples in other areas: the World Wide Web Consortium, responsible for the World

407 A. LIM and K. TSUTSUI: “Globalization and Commitment in Corporate Social Responsibility: Cross-national Analyses of Institutional and Political-Economy Effects”, in American Sociological Review, Vol. 77 No. 1 (February 2012), pp. 69-98, at p. 88. 408 Shall we recall SPP vs. Egypt recognising lucrum cessans only until the entry into force of the UNESCO Convention on World Heritage, after what any benefits would have been internationally illegal; as in other investment and trade situations analyse in the precedent section. S. DEVA: Regulating Corporate Human Rights Violations. Humanising Business, London-New York 2012, Routledge Ed., p. 139. 409 “The use of private-sector standards, codes, and best practices –a kind of contemporary version of the medieval lex mercatoria– is a major and increasing factor in international business”, says L.L. HERMAN: “The New Multilateralism: The Shift to Private Global Regulation”, Institute C.D. Howe Commentary, No. 360, Canada (August 2012), 17 pp., at p. 15.

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Wide Web rules “totally outside of international treaty”; and the work of the

International Organisation for Standardisation (ISO), a non-governmental organisation

whose numerous standards are just unavoidable in international business410.

Precisely in the area of global financial regulation is where soft law is stronger or, at

least, a subject that more evidently shows that “soft law can have its own hard

edges”411, with its positive and negative effects. Of course, the abundance of soft norms

in international finances can be partially linked to 2008 global economic crisis: besides

a good number of market causes, it is true that there have been failures in the successive

Basel Accords and Principles, in international accounting standards and credit-rating

agencies –in sum, in the “global systemic risk regulation” 412. The crisis might have

marked a turning point towards a bigger public input and stricter regulation of

derivatives, hedge funds and rating agencies413, a trend that still has to be confirmed in

the future.

In this context, the critique can be easily summarised in Marxist terms: for the capital, it

was not enough to control the means of production; it now wants to control the means of

production of norms, by fostering soft law in a frame of global benefits but fragmented

jurisdictions. Against this background, it must first be said that sources of legitimacy

and norms have historically been diverse: even in Roman law we might find ‘soft law’

examples, starting with the difference between potestas and auctoritas, the latter being

the simple capacity to persuade but deprived of the formal competency to command414.

Those who point out soft law’s positive effects frequently refer to a wider flexibility to

adapt to changing scenarios and more easy corrections or changes when needed, while

the negative side would be an alleged lack of democratic legitimacy in the rule-making

process. Equally positive would be its capacity to set itself up as an interpretation of

hard law instruments, which at times would otherwise be difficult to operationalise, but 410 Ibíd., pp. 6-8 (for all the examples cited in this paragraph). 411 C. BRUMMER: Soft Law and the Global Financial System. Rule Making in the 21st Century, Cambridge 2012, Cambridge University Press, p. 174. 412 Ibíd., pp. 213-229. 413 S. PAGLIARI: “Who Governs Finance? The Shifting Public-Private Divide in the Regulation of Derivatives, Rating Agencies and Hedge Funds”, in European Law Journal, Vol. 18 No. 1 (January 2012), pp. 44-61. 414 On the auctoritas: “Questo concetto prettamente romano, quistessenza dell’aristocratica società tardo republicana, esprime bene l’idea della normatività debole, non implicando la competenza di comandare, ma la semplice capacità di persuadere”. T. GIARO: “Dal Soft Law moderno al Soft Law Antico”, in A. SOMMA (a cura di): Soft Law e Hard Law nelle società postmoderne, Torino 2009, G. Giappichelli Ed., pp. 83-99, at p. 93.

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the other side of the coin is its obscure judicial review. Again as a starting point and

before this research focuses on the EU’s contribution, the most authoritative and cited

reference on soft law is Abbott and Snidal’s research, according to which it is a

“continuum” far away from Kelsen’s positivist tradition415, to rather show the “deep

connection of law and politics”416. We already warned on the tight link between law and

politics in the introduction, in line with Max Weber’s thinking. Indeed, the influence of

the political debate is unavoidable and it would be naïve not to recognise that

companies are “already engaged in these governance processes”417. At least the largest

corporations are de facto both economic and political actors, so that some kind of

political ingredients need to be included in the CSR discourse and development, like

democratic legitimacy and human rights, opened to all kind of stakeholders418 from a

pragmatic standpoint.

In IHRL, the so-called ‘name and shame’ strategies have generally failed to improve

States’ human rights performance or, at least, to generate long-term and structural

improvements. In our view, name and shame strategies are more likely to work in the

case of TNCs, unlike States, since the market’s reward or punishment directly threatens

their obvious raison d’être: reputational risks may have a translation into their

economic performance, provided there exists a certain level of consumer’s awareness.

This is a kind of “social sanction”419, which has never ceased to exist whether or not the

positivists like it420, coherently with our sociological approach to the formation of

415 As expected in legal studies, the positivist tradition is strong and considers, all in all, that soft law is just a “trap” and a “legal metaphor”: L. BLUTMAN: “In the Trap of a Legal Metaphor: International Soft Law”, in International and Comparative Law Quarterly, Vol. 59 No. 3 (July 2010), pp. 605-624. 416 In sum, soft law is sometime a “way station to harder legalisation”, with advantages and disadvantages shared with hard regulation, and some exclusive benefits and costs. K.W. ABBOTT and D. SNIDAL: “Hard and Soft Law in International Governance”, in International Organization, Vol. 54 No. 3 (Summer 2000), pp. 421-456, at pp. 423-424 and 455 (quotes). 417 A.G. SHERER and G. PALAZZO: “Towards a Political Conception of Corporate Responsibility: Business and Society Seen from a Habermasian Perspective”, in The Academy of Management Review, Vol. 32 No. 4 (October 2007), pp. 1096-1120, at p. 1098. 418 The so-called “stakeholderism” is one of the most important innovations brought by the CSR movement: B. DUBBACH and M.T. MACHADO: “The importance of stakeholder engagement in the corporate responsibility to respect human rights”, in International Review of the Red Cross, Vol. 94 No. 887 (Autumn 2012), pp. 1047-1068, at pp. 1053-1058. 419 On this concept in international law, see: A. TANZI: Introduzione al diritto internazionale contemporaneo, Milano 2013, CEDAM Ed., pp. 51-53. 420 Amusingly, Prof. Tanzi further says: “Il convincimento più diffuso che si incontra negli student dopo il primo anno di studio in una facoltà di giurisprudenza –e che li fa apparire come dei fedeli epigoni, ora del positivismo giuridico, ora della kelseniana “dottrina pura del diritto”, e, nonostantante ciò (o proprio per questo), comunque scettici nei riguardi del diritto internazionale – è quello della natura coercitiva dell’ordinamento giuridico. [...] Tuttavia, sarebbe errato sostenere che la regola giuridica operi

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International Law. And quite more importantly, soft law instruments can contribute to

extend an international practice and generate, in the long term, a consuetudine that can

be said to follow an opinio iuris if sufficiently consistent and expanded421.

In this line, soft norms can also contribute to effectively ‘open’ the windows of

opportunity we have detected concerning international trade and investments, as long as

we renounce to maximalist demands and wish lists. However, the list of pros and cons

is endless and it is not our objective to settle the debate on whether soft law advantages

compensate the eventual shortfalls and gaps: we only suggest the answer is probably a

matter of degree, that is, the quantity of soft instruments and how they are used.

As said before, we are no longer in the initial choice between hard law and soft law. As

a matter of fact, CSR is not anymore an exclusively soft law area. At the end of the day,

the question is wrong: it is “not an either/or proposition: both are necessary”422. We

have rather observed an interaction and intermix of hard and soft norms. For the time

being, we may conclude that soft law is helping or completing IHRL, or has shown its

potential to do so, in two essential aspects: prevention and horizontalisation with regard

to TNCs, while bypassing some crucial legal problems that could block for a long time

any hard law initiative (for example, international subjectivity).

As said before, we referred to this in further detail when we criticised the ‘treaty route’.

Ultimately, only States have to respect their international obligations and, even though

many academics put forward the need of designing a specific legal personality for

transnational companies and individuals, we don’t think this is a really effective

shortcut to improve respect for human rights when international businesses are

involved, as we have also justified that the proliferation of biding international treaties

isn’t either always the best way to materially foster human rights and, hence, part of the

efficacemente venendo rispettata esclusivamente in ragione dell’esistenza e del funzionamento di meccanismi sanzionatori”. Ibíd., p. 50. 421 Soft law would have a “function of crystallisation” [funzione di cristallizzazione]. Ibíd., p. 153. It has further been studied that soft instruments have widely been used when international tribunals had to decide whether a certain practice already constitutes a consuetudine or not, and also in the course of treaties’ negotiations within the travaux préparatoires. Ibíd., pp. 151-165. 422 H.S. DASHWOOD: “Corporate Social Responsibility and the Evolution of International Norms”, in J.J. KIRTON and M.J. TREBILCOCK (Eds.): Hard Choices, Soft Law. Voluntary Standards in Global Trade, Environment and Social Governance, Hants (England) 2004, Ashgate Publishing Company, pp. 189-202, at p. 199.

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usefulness of complementary soft law instruments423. In order for human rights treaties

to have –in and of themselves– tangible effects in the field, we usually need to be in

democratic countries with relatively strong CSO’s and NGOs, preferably with solid

international connections; otherwise, the real impact of international human rights

treaties has proved a very limited one424. More regulation does not automatically and

necessarily lead to better compliance, neither in internal legal orders nor at an

international level. We therefore have to abandon ideological misunderstandings on

what regulation is and its real effectiveness and demystify hard law –while avoiding the

other extreme of uncritically praising soft law. In our subject, the effectiveness of IHRL

is not obvious in view of the regularity of violations. As pointed out by Prof. Douglass

Cassel, the real impact of a human rights treaty will largely depend on the institutional

environment and its valuable effects have to be “understood as part of a broader set of

interrelated, mutually reinforcing processes and institutions –interwoven strands in a

rope– that together pull human rights forward, and to which international law makes

distinctive contributions”425.

Consistently with our analysis in Chapter I, we therefore propose overcoming certain

blocking dichotomies and this includes the apparently irreconcilable opposition between

mandatory and voluntary schemes. International practice shows an interaction and

combination of both policy options. We can also anticipate that the EU, at a regional

level, has followed a sort of third way consisting of a voluntary within mandatory

approach, as it will be developed in the second part of this work. In this line, we take as

a premise that hard and soft law are “complements, not alternatives”426.

423 O. MARTÍN-ORTEAGA: “La diligencia debida de las empresas en material de Derechos Humanos. Un Nuevo estándar para una nueva responsabilidad”, in F.J. ZAMORA, J. GARCÍA CIVICO, L. SALES PALLARÉS (Eds.): La responsabilidad de las multinacionales por violaciones de los derechos humanos, Madrid 2013, Universidad de Alcalá - Defensor del Pueblo, pp. 167-192. 424 E. NEUMAYER: “Do International Human Rights Treaties Improve Respect for Human Rights?”, in The Journal of Conflict Resolution, Vol. 49 No. 6 (2005), pp. 925-953. 425 D. CASSEL: “Does Human Rights law make a difference?”, in Chicago Journal of International Law, Vol. 2 No. 1 (Spring 2001), pp. 121-135, at p. 135. 426 N. BAYNE: “Hard and Soft Law in International Institutions: Complements, not alternatives”, in J.J. KIRTON and M.J. TREBILCOCK (Eds.): op. cit., pp. 347-351.

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2.3.2 The role of international organisations

The media and popular imaginary expect any ‘expert’ worthy of that name to

mercilessly criticise international institutions. It is commonplace to blame international

organisations under any pretext and an interestingly similar discourse demonises TNCs.

Black and white analyses seem to us oversimplifying and useless; we will now make

some institutional remarks.

In a gradually liberalised world economy where international contracts and investments

are widespread, States and International Organisations have a crucial role to play. The

trade of diamonds and the Kimberly Process Certification Scheme provides again an

enlightening example of the radical importance of the institutional environment to foster

CSR, including “carrots and sticks”427 in a mixed legislative-voluntary scheme and

tripartite negotiations involving States, NGOs, CSOs and the industry, all of which

should ideally have a proved legitimacy: States to be preferably democratic and

institutionally solid; NGOs and CSOs have legitimate interests and be representative;

and the industry should be consolidated and agree on the starting point (the need to

tackle the adverse impacts of their business activity). In our view, we fully agree with

the idea that institutionalisation is the key to “translate CSR rhetoric into concrete

actions”428 and, in this respect, international organisations have played a prominent role,

though improvable or unfinished.

In our view, international institutions can decisively contribute to the development of a

human rights-friendly business milieu. Similarly to human rights treaties, corporate

social responsibility –understood as a mixture of hard and soft law instruments mainly

centred on ‘business and human rights’ issues– is more likely to have an effect the

stronger is civil society and the “institutional terrain within corporations operate”429, to

name just a few aspects: public pressure, trade unions, NGOs, monitoring and

inspection bodies, proper legislation encouraging and framing CSR, a competitive and

healthy economy and, of course, a democratic regime.

427 F. BIERI and J. BOLI: “Trading Diamonds Responsibility: Institutional Explanations for Corporate Social Responsibility”, in Sociological Forum, Vol. 26 No. 3 (September 2011), pp. 501-526, at p. 507. 428 Ibíd., p. 502. 429 J.L. CAMPBELL: “Why would Corporations Behave in Socially Responsible Ways? An Institutional Theory of Corporate Social Responsibility”, in The Academy of Management Review, Vol. 32 No. 3 (July 2007), pp. 946-967, at p. 962.

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Both national and international institutions have a critical role to define the framework

within which they discipline the diverse initiatives, facilitate and promote corporate

human rights respect. The institutional environment is the reason why, for example, this

research is peppered with tangential references to other problems, being a prominent

example the issue of fragile and failed states, but also other factors like aid and

development430 or political and legitimacy questions

In developing and least developed countries, public debt imbalances, economic

weaknesses and needs are priorities that tend to shadow their human rights obligations.

On the companies’ side, we have already stated that it is Manichean and inaccurate to

only blame companies, alleging that they specifically look for weak State regimes.

However, generally speaking, the business tendency will be more likely to adapt to –

let’s say– undesirable situations in third countries rather than put at risk investments or

benefits. We can now add another reason why only soft self-regulation is insufficient:

once again, the institutional environment of developing and least developed countries.

Strategies based solely on the self-interest of companies (the ‘business case’) clearly fall

short; public inputs and frames are needed, on which international organisations can

provide significant guidance to overcome and address, in parallel, weak governance and

poverty in those countries.

Concerning the politics of democracy and legitimacy issues, the critiques against soft

law are ultimately rooted in alleged problems of democracy and legitimacy within

international institutions, the ones who create those soft instruments. We must note,

even at the risk of being repetitive, that IOs are created by and for States, so the latter

are the key-players. As rightly indicated by Norberto Bobbio, the international

community will be democratic only when all States are themselves democratic and, vice

versa, a State’s democracy will be imperfect and experience problems in the

international community if there are still non-democratic regimes in the world431. This

situation has its reflection within international institutions in terms of transparency,

accessibility, public participation and human rights performance. In this vein, we should

stop using the 19th century-logics on nation-state democracies to design the multilevel

430 Blowfield argues that CSR has reinvented the meaning of development; only time will tell if positive changes will come but, for the moment, it has been useful to uncover hidden issues in terms of supply chains and raise social awareness. M. BLOWFIELD: “Corporate Social Responsibility: Reinventing the Meaning of Development?”, in International Affairs (Royal Institute of International Affairs), Vol. 81 No. 3 (May 2005), Monographic issue: Critical Perspectives on Corporate Social Responsibility , pp. 515-524. 431 N. BOBBIO: op. cit., pp. 416-417 and pp. 444-445.

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international governance and rather start thinking of IOs differently. Perhaps novel

forms of international democratic accountability appear someday. For their success,

they will have to overcome the three main problems of multilevel governance: the

“weak visibility” of its inherent networks, “their selective composition and the

prevalence of peer over public forms of accountability” 432.

In this regard, functionalism still dominates the theory of international organisations,

with the immunity doctrine and the ‘members-driven’ leitmotiv at its heart. In practice,

the predominant functionalist theory of IOs fails to assess the real role of politics within

IOs and the complexity of overlapping functions and powers, interface subjects and

accountability problems433. In the first section of this chapter we have mentioned a

number of overlapping CSR initiatives undertaken by different IOs. And we witness

timid improvements that occur in the normal way many things happen in the

international sphere –through simple faits accomplis. In effect, nowadays IOs start to

coordinate each other policies and engage in unprecedented manners with actors other

than member-States, which shows a growing openness; at the same time, the doctrine of

human rights mainstreaming is more widely accepted to introduce human rights

concerns into the practice of specialised institutions, of course without turning around

their founding goals. In the second part of this research, we will see that the EU, as an

“extreme”434 international organisation, accordingly carries substantive CSR to the

extreme, compared to the global instruments. This change or evolution of IOs is in its

infancy and silently challenges the above-mentioned limits of the functionalist theory of

IOs. Furthermore, the daily practice and work of IOs could be explained in terms of

‘implicit powers’ and escapes traditional moulds435. There are organisations more

geared to services (the UN) and others tend to serve as fora (the WTO)436, but this

classification does not provide us with clear-cut distinctions either.

432 Y. PAPADOPOULOS: “Problems of Democratic Accountability in Network and Multilevel Governance”, in European Law Journal, Vol. 13 No. 4 (July 2007), pp. 469-486, at pp. 473-478 and 480-483. 433 On the limits of the “scope of functionalism” see: J. KLABBERS: “The Transformation of International Organizations Law”, in The European Journal of International Law, Vol. 26 No. 1, pp. 9-82, at pp. 30-33. 434 Ibíd., at p. 33. 435 J. KLABBERS: An Introduction to International Institutional Law, Cambridge 2009, Cambridge University Press, pp. 53-73. 436 R.W. COX and H.K. JACOBSON: The Anatomy of Influence. Decision-making in International Organisations, New Haven – London 1972, Yale University Press, pp. 5-6.

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That said, it is difficult to evaluate to what extent an IO, created by States as “an

institution with a life of its own”, can become a threat to States themselves and, at

times, eventually act against their interests, which is very much the case in many

delicate human rights situations. Perhaps the remaining insistence on functionalism and

the recurrent limitations of IOs are, in fact, the States “response to the Frankenstein

problem”437 –thus preventing IOs from becoming a ‘monster out of their control’. Apart

from theorisations, the fact is that IOs legitimacy will largely depend on two factors: 1)

the number of democratic States within the international community; and 2) the

formation of a specific sociological legitimacy for IOs, precisely built through their

compliance of International Law and, very prominently, of human rights law438.

Finally, by way of conclusion, the following points indicate some of the most prominent

contributions that could be made by international organisations at a global scale:

1) To build an atmosphere of trust and dialogue, indispensable basis on which

the international society can conduct negotiations and reach agreements;

2) Mainstream human rights into their founding objectives, whatever these are;

3) Give priority to capacity-building in developing and least developed

countries. Capacity-building should include all actors: States, institutions,

policy makers, investors, traders and producers, companies, lobbies, judges

and arbitrators, workers and consumers, NGO’s and CSO’s;

4) Prioritise good governance. Essential components are democracy, rule of

law, predictability, political stability, transparency and access to justice;

5) Link the agendas of the different international organisations;

6) Promote cross-cutting public agencies, both national and international, to

help address transversal human rights issues, capable to put in place tailored

measures and initiatives adapted to each economic sector;

437 A. GUZMAN: “International Organizations and the Frankenstein Problem”, in The European Journal of International Law, Vol. 24 No. 4 (2013), pp. 999-1025, at p. 1018. 438 This would lead to a “reputation” that would serve as the basis for legitimacy. K. DAUGIRDAS: “Reputation and the Responsibility of International Organizations”, in The European Journal of International Law, Vol. 25 No. 4 (2015), pp. 991-1018, at pp. 1007-1010.

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7) Support negotiations as usual, but also at a domestic level providing with the

organisation’s expertise;

8) To work on international standards is critical in order to extrapolate good

governance to the international sphere and, through harmonisation, attain a

predictable international order. Proposals ought to be clear, concise,

pragmatic and understandable, built on a long-term and technical vision;

9) For the success of this work on international standards, organisations could

create reliable information systems, including human rights indicators, as

objectively as possible;

10) Bring all stakeholders to the table and make sure their voice is heard,

extending the external participation channels in the decision-making process,

even though the final decisions fall on member-States;

11) To structure and spread public-private dialogue and PPPs, at an internal

level and internationally. International organisations could without fear

engage in more and more direct dialogue with the private sector –there is no

reason why this dialogue might go against their intergovernmental nature

and scope.

12) Lastly, the possibility of promoting private sector partnerships could be

explored by governments and international organisations to expand good

practices and encourage social responsibility guidelines and codes of

conduct.

13) Promotion of “human rights impact assessments”439, inspired in the

environmental ones.

The successful interplay of the foregoing bullet-points will mark the final contribution

of IOs in two crucial aspects: the progressive development of International Law in

relation to business and human rights, and the promotion of an extended and consistent

States’ practice in the same direction.

439 There is a lot of pending research on ‘human rights impact assessments’ applied to areas such as investments and trade, which would foster the preventive aspects of IHRL. A practical and interesting proposal to assess trade agreements at: S. WALKER: The Future of Human Rights Impact Assessments of Trade Agreements, Antwerp-Oxford-Portland 2009, Intersentia Ed., xiv + 252 pp. passim.

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CHAPTER III

Corporate Social Responsibility in the European Union

CSR is somehow linked to many different policies of the European Union, even before

being labelled and receiving that name. One of its related issues is sustainable

development: fight against poverty is essentially articulated through development

policies which are, since 2000, tightly related to the MDG’s of the United Nations.

However, this commitment to human rights and engagement towards developing

countries goes beyond mere development policies and, more and more, affects other

European actions such as commercial and neighbourhood policies. In this sense, we

need to analyse to what extent CSR and fight against poverty have started to overlap

and to create synergies with other EU policies, advancing in the achievement of the

MDG’s and the post-2015 agenda.

The EU has developed CSR on three different levels:

1) Within the international framework in this subject, that is, in accordance with

codes and norms of other international organisations and some particular

initiatives of member States.

2) Secondly, a specific frame was born after the Green Paper on Corporate Social

Responsibility (2001) together with an important Communication of the

Commission on CSR (2002), which constitute the initial benchmark, followed

by a rich documentation functioning as a general guidance.

3) Lastly, the EU has introduced CSR in almost any of its policies, which now

include CSR objectives. Among these policies, the most important fields are the

cooperation and development, environment, employment, consumers’ protection

among others.

3.1. The emergence of CSR in the EU

3.1.1. From a limited concern ad intra to a wider development goal

CSR could initially be understood as another complementary way to promote a fully

integrated interior market and to facilitate the enlargement eastwards, making it

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compatible with the European values. Its link with more general human rights and

development goals has been understood more recently, in particular for those countries

with which the EU has commercial, financial or political-strategic relations.

The obvious problem at the beginning is that the EU’s CSR objectives were far from

reflecting the real problems and needs of developing or under-developed countries, as

summarized in the UN goals. The level of development of member States might explain

why European companies usually didn’t include among their CSR objectives the most

prominent human rights issues, such as the reduction of extreme poverty or child labour,

which are not urgent problems inside the EU but core goals of the 2015 world agenda

and the new SDGs for 2030. Nevertheless, European companies have the engagement of

promoting the respect of the same norms and codes of conduct in all countries in which

they operate, regardless of the usual breach of fundamental rights in some of these

places.

Delors declaration in 1993 against social exclusion is the most repeated key date when

studying the origin of CSR, inaugurating the European Union after Maastricht with a

clear social agenda: “[t]he social dimension is the Achilles heel of a Community that is

misunderstood, that lacks grassroots support”440. It could have been a perfectly

forgettable political statement; its importance a posteriori lies in the impact it had in the

private sector, leading to the creation of European networks of companies, and because

it helped to launch a new conception of a social Europe, linking it both to economic

prosperity and to its external action: “without economic muscle the Community will be

in no position to demonstrate solidarity with countries suffering from internal divisions

and underdevelopment, or to exert any influence on world affairs”441. The inclusion of

new social concerns is logically related to the introduction in Maastricht of the

European citizenship.

Delors’ triangle linking the social agenda, the economic integration and prosperity

together with the EU international role, constituted the first step towards the

development of new non-economic concerns of the European Union, both internally and

externally. Not surprisingly, it is also in 1993 when the European Council at

440 Address by Jacques Delors, President of the Commission, to the European Parliament on the occasion of the investiture debate of the new Commission, Strasbourg 10 February 1993, Official Journal of the European Communities, Supplement 1/93, p. 9. 441 Ibíd., p.11.

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Copenhaguen established a set of four criteria for eventual enlargements (completed

with a fifth requirement in 1995 in Madrid) including clear human rights and

democratic references442. The political environment induced the European Union to

become more aware of its international role beyond mere economic factors.

In 1999, the EU Parliament approved a Resolution on the EU standards for European

Enterprises operating in developing countries: towards a European Code of Conduct.

This document called on the Commission and the Council to keep working on corporate

responsibility in line with the work of other international organisations, particularly the

OECD and the ILO. Besides some classic initiatives from a European approach, such as

the creation of a “social label”443, this Resolution insisted on the need of monitoring

mechanisms, in order to ensure that Companies operating on behalf of the EU in third

Countries respect EU standards, at the risk of losing the adjudication of projects through

the European Development Fund or the Commission’s budget444. An explicit reference

is also made to future EU agreements with third countries, which should not forget

social and human rights issues, including investment agreements445. The Parliament

finally foresaw a European code of conduct to facilitate the standardisation of voluntary

good practices, with the help of an observatory on CSR eventually comprising of

complaints and coercive measures.

This control is very problematic when dealing with the international activity of

European transnational companies. A supplier of several European transnational

companies could be subject to different codes of conduct imposed by its clients, in such

a way that part of its commercial relations would be seen as “socially responsible” but

some others not, even in the case of the same product and the same production criteria.

This is why, even though many companies were already writing their own CSR reports,

generally centred on the environment, health or safety at work, only very few included

respect for human rights in general terms or child labour. The diversity of the data in

these reports showed the need of a wider consensus at an international level on the

contents of CSR, its structure and reliability. Furthermore, the complexity of corporate

442 A. BIONDI, P. EECKHOUT and S. RIPLEY (Eds.): EU Law after Lisbon, Oxford 2012, Oxford Univ. Press, p. 131. 443 EUROPEAN PARLIAMENT: “Resolution on EU standards for European enterprises operating in developing Countries: towards a European Code of Conduct”, [A4-508/98], Official Journal of the Europen Communities, C 104, Part II, 14 April 1999, pp. 180-184, para. 13 444 Ibíd., para. 23. 445 Ibíd., para. 25-27 and 30.

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structures, that is, the fluidity and confusion between EU-based parent companies and

their international operations in third countries, make this problem even more difficult.

On the other hand, all the documents on CSR emanating from EU institutions

acknowledge and assume the previous work of other international organisations, so that

there is no doubt on where the EU has found its inspiration. The most usual explicit

references are the United Nations Charter, the Universal Declaration of Human Rights,

the most prominent international human rights law, the 1977 ILO Tripartite Declaration

of Principles concerning Multinational Enterprises and Social Policy, the 1976 OECD

“Guidelines for Multinational Enterprises”, the 1998 ILO Declaration on Fundamental

Principles and Rights at Work, specific recommendations of FAO, WHO, World Bank

and other specialised agencies. After 2000/2001, further references will be made to

more recent guidelines and documents, in particular to the work of the SRSG John

Ruggie in the area of business and human rights.

In March 2000 we find the first explicit and important reference to CSR: the European

Council at Lisbon made “a special appeal to companies’ corporate sense of social

responsibility regarding best practices on lifelong learning, work organisation, equal

opportunities, social inclusion and sustainable development”446. In this way, the Council

highlighted the will to develop CSR by establishing good practices in areas such as

education, continuous training and social affairs, consistently with the notion of

sustainable human development, i.e., the fusion of sustainable growth and human rights.

This objective represented an important advancement and a challenge to the extent it

was aimed at facing future changes derived from globalisation and a knowledge-based

economy, all in line with European values and social conceptions. In this direction, it

was necessary to increase the investment in human capital and to combat social

exclusion in order to proceed to a real modernisation of the European social model. In

the same direction, it was acknowledged that human capital was the main asset of the

EU and this idea had to inspire any European policy including CSR aspects (at least,

indirectly). More concretely, it was proposed to significantly increase per capita

investment in human capital; to reduce by half before 2010 the number of citizens

between 18 and 24 years old with secondary education who do not receive any further

preparation; and to define new basic skills for continuous training, as well as the

446 We find up to eight references to private companies: Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000, para. 39 (citation –emphasis added).

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promotion of private-public partnerships in the field of education447. In this sense, even

though the EU would act as a catalyst, the fundamental actions had to be undertaken by

the private sector (companies).

In the Commission’s Social Policy Agenda 2000448 a special mention was made to the

requirement of incorporating social responsibility as an active strategy to remediate the

negative consequences of globalisation and economic integration in the employment

market. For that purpose, the impulse of a coordinated CSR strategy in Europe had to go

through multi-stakeholder partnerships (NGO’s, CSO’s, companies, social public

authorities, etc.). The so-called “social partners” had a crucial role in the view of both

the Commission and the Council; it is our understanding that the level of institutional

engagement was still low, limited to the general promotion of these initiatives without

really launching concrete actions, even though it is necessary to point out that the social

aspects of the “European Union external relations” were reaffirmed, not only in

anticipation of enlargements but also in general terms with regard to third countries449.

During the Stockholm European Council, in March 2001, whose main target was full

employment, a variety of CSR related issues were considered, although indirectly. The

pre-crisis politics were centred on building a sustainable growth, wondering on which

way the European social model had to be updated so as to include new educational and

training skills, adapted to the information society and knowledge-based economy. In

this strategy, well-designed systems of social protection deserved being studied as

important productive factors: more but also better work, as already stated in the Lisbon

Council (2000), to improve working conditions, foster equal opportunities (gender

policies and persons with disabilities), facilitate continuous training, ensure safety at

work and reach a better balance between family life and career.

A specific heading on Corporate Social Responsibility was included, welcoming

business-lead initiatives and the already existing project of a Green Paper in this area450.

What is important to note is that, little by little, an external dimension was progressively

447 Ibíd., para. 26. 448 COM (2000) 379 final. 449 Presidency Conclusions, Nice European Council, 7-10 December 2010, Annex 1 (Social Agenda), title VI. 450 Presidency Conclusions, Stockholm European Council, 23-24 March 2001, para. 31

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added to CSR issues, consistent with more general development goals at an

international level.451

The European engagement to renovate economic and social policies received a powerful

impetus at the Gothenburg European Council (June 2001), when a general new strategy

for sustainable development was approved adding a new environmental approach to

some of the previous agreements, particularly relevant to complete the Lisbon strategy

for CSR. We still don’t always find explicit references to CSR but the bases were

settled to build its further development. It was recognised that all economic, social and

environmental policies had to be implemented taking into account their social effects

and interactions, in order to design a comprehensive and holistic approach to coordinate

institutional initiatives towards sustainable development. Since Gothenburg,

considerations on the “social impacts” had to be introduced into the Common

Agricultural Policy, the Fisheries Policy, the Integrated Product Policy (“in cooperation

with business”, especially to improve waste management)452, what established a

precedent to potentially mainstream CSR issues into any European policy.

On a more general note, the Council also made some significant political statements,

saying for example that “[s] ustainable development –to meet the needs of the present

generation without compromising those of future generations- is a fundamental

objective under the Treaties”453, providing us with a definition at the same time it

informs us on which direction is evolving the approach to social responsibility linked to

more global and general goals. To confirm it, the Council expressed its engagement

towards reaching an agreement at the then forthcoming Doha Round, which indeed

ended up inserting into the WTO practices a more friendly attitude towards

development, taking into account the ever since undeniable importance of the social

dimensions of globalisation454. However, Doha would block the WTO for a decade.

At this point, we start to realise that the emergence of CSR in the EU has two main

characteristics: it initially follows the initiatives taken by other international

organisations, assuming this global work without additions. CSR receives of course

451 O. AMAO: Corporate Social Responsibility, Human Rights and the Law. Multinational corporations in developing countries, New York 2011, Routledge Ed., pp. 207-215. 452 Presidency Conclusions, Gothenburg European Council, 15-16 June 2001, para. 31. 453 Even though the Council didn’t specify on which articles of the Treaties this statement could find support. Ibíd., para. 19. 454 Ibíd., para. 26 and 45.

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some institutional support through the documentation cited above, but its content

heavily relies on private and voluntary initiatives, who may take over. As it has

happened in many fields of the European integration, the society takes the baton and

runs with it in parallel to slower and highly bureaucratised EU institutions. Later, back

to the institutional level, whilst CSR is gradually consolidated, the EU has made an

interesting contribution that we start to witness since year 2000: to strengthen the global

dimension of CSR, its potential in terms of sustainable human development through

cooperation and development policies, and even through trade or investment contracts

(in the case of the Parliament resolutions, usually more audacious than the Council or

the Commission).

This very important international or external dimension of CSR is again confirmed at

the Gothenburg Council. Part of the agreement stated that sustainable development had

to be included in cooperation programs, aimed at extending this practice to other

international organisations. The European Union was assuming this way its

international role, perhaps even a desire for leadership, to promote an adequate

protection of the environment and a consistent commercial policy. There were four

concrete areas on which the Council put emphasis: climate change, natural resources,

transport and public health.

At this first stage of CSR in the EU (before 2009), apart from the practice of the

Parliament and the Council, the Commission was also working in this field and made

two main contributions: the Green Paper promoting a European framework for CSR

(2001)455 as well as the famous 2002’ Communication456, when CSR received proper

consideration by itself as a new crosscutting strategy in the EU.

The Green Paper was aimed at creating a general frame for companies and all eventual

stakeholders, in line with the sustainable development agenda settled at Gothenburg and

with a view to avoiding the potential adverse effects of European integration and

globalisation trends in the economy and labour markets. The Commission insisted on

the fact that corporate contribution must be understood as going beyond the existing

legal obligations, so that CSR is not a substitute for legal constraints, but a complement

455 COM (2001) 366 Final, 18 July 2001, Green Paper promoting a European framework for Corporate Social Responsibility. 456 COM (2002) 347 Final, of 2 July 2002, Corporate Social Responsibility: a business contribution to sustainable development.

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to boost development consistently with both general human rights compliance and the

European social agenda. According to the Commission, it was crucial to work on a

double direction: to involve all stakeholders and as many CSO’s / NGO’s as possible,

and secondly to extend these initiatives also to SME’s, which actually constitute the

majority of the productive and business sector.

In a more concrete manner, the Green Paper includes different engagements from an

intra-European point of view:

a) Concerning the management of human resources, the objective is to foster and

maintain qualified workers thanks to continuous education and training, equal

remuneration programs and better information on the companies themselves.

Non-discrimination responsible practices were encouraged so as to facilitate

labour opportunities to less qualified work force, less educated or elderly people,

sustained on training policies in close cooperation with local public authorities

in charge of education and professional programs.

b) As for public health and safety at work, this is to a great extent a pending subject

in the EU due to the expansion of subcontracting and outsourcing practices

making it difficult to apply CSR principles (or even prevent directly illegal

practices). We cannot forget that most of the historic improvements in labour

and social security law have been achieved through legal constraints. To

stimulate good practices in this area, we might propose quantifying its benefits

in the companies’ management and within marketing policies.

c) In regard to the environment, the main goals are the reduction of use of

resources, pollution and waste management. This field has experienced a

significant and prompt improvement because companies were primarily

interested in reducing the associated costs (power and raw materials),

compensated with efficient waste management and recycling processes, which

are in addition easily measurable in traditional accounting systems and Boards

of Directors’ reports.

From an institutional and international perspective, more relevant to us, the Commission

wants European enterprises to integrate CSR within their commercial and development

policies, extending its use to other international scenarios and contexts. Already

recognised obligations under international human rights law are not under discussion

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because of CSR recent developments. Companies have to be aware of this fact whether

they operate in Europe or in third countries even where human rights violations or

corruption might be usual. Although the EU had already given importance to the OECD

and ILO principles and norms, with the Green Paper a new commitment was expressed

trying to push forward standards and regain some leadership in its interaction with other

international organisations. As for CSR’s external dimension, networking plans were

fostered towards the creation of private partnerships in line with common guidelines, for

example, when looking for suppliers (supply chains easily become CSR “black holes”

as they become more and more complex and global). It is in the relationship with

customers where CSR has quite quickly developed (so-called “eco-friendly” products

and services); not that much when dealing with suppliers. The reason is that consumers’

awareness is higher and demand such responsibility while, at the same time, benefits for

companies and calculations are easily integrated in marketing plans457. In summary, the

remaining problems (up to now) are the same: credibility, standardisation, measurement

and information systems, monitoring and impact assessments (to detect the benefits for

both companies and society).

In this sense, the institutional role of the EU is potentially positive, if institutions dare

developing these ideas. As preconized by the EU Parliament report on the Green Paper,

it seems easy to call on the Council and the Commission to go one step further, starting

with the liability of EU parent companies operating abroad also within EU Courts458

(see Chapter IV, heading 2), or making CSR mainstream to any business and not only a

voluntary “extra add-on” taking into account the actual influence of many EU-based

transnational companies. The voluntary component of CSR would be the choice of the

concrete way to implement and select the particular focus of the company, but not the

fact of having a CSR policy. The most audacious institutional player in the emergence

of CSR in the EU has been the Parliament, but we need to balance all positions without

forgetting the importance of the external dimension of CSR. The need to improve

human rights respect in economically developing countries where EU-based companies

operate is crucial. At the same time, the internal dimension of CSR shouldn’t be

457 C. VALOR and I. HURTADO (Coords.): Las empresas españolas y la Responsabilidad Social Corporativa. La contribución a los Objetivos de Desarrollo del Milenio, Madrid 2009, Ed. Catarata, pp. 38-45. 458 The EU Parliament Report on the Green Paper took form of a Resolution on the Commission Green Paper on Promoting a European framework for Corporate Social Responsibility (COM(2001) 366 –c5-0161/2002-2002/2069(COS)), para. 50 (for the interpretation of the Brussels Convention and the extraterritorial liability of EU companies, analysed below –Chapter IV, Section 2).

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neglected in order to maintain and preserve human rights standards in economically

developed countries. The number of pending cases in ECHR suggests that Europe is not

necessarily a paradise; it could be said that the EU Parliament excessively focuses on

the external dimension459, even if we also need to put the above-cited Parliaments’

Report on the Green Paper in the context of pre-crisis politics and keep in mind that it

constitutes a perfectly legitimate and well-founded political desideratum. In any event,

the global approach of the Green Paper and the international concerns of the Parliament

don’t seem problematic, but useful to foster CSR through an early global approach460.

Finally, the Communication of the Commission issued in 2002461 importantly clarified

the European frame on CSR. The new strategy was designed specifically thinking of

private actors, in such a way that public authorities would only encourage it as a

complementary way to contribute to sustainable development (together with other

classic developmental policies). In summary, the proposal envisaged the following

developments:

a) The positive impact of CSR had to be disseminated, both inside and outside

Europe, to the extent most of the companies are still not able to quantify its

potential effect on productivity and neither consumers know to what extent it

can benefit them. To that end, the exchange of information and experiences

would be promoted between companies and Member States, especially within

the same economic sector, to reach a common understanding on core CSR

notions and to help the establishment of agreements that might reduce the initial

cost of introducing CSR codes. This is based on the recognition of a long-term

interest of companies, once the Commission realises that the Parliament was

right when saying that CSR was no longer an “add-on” but had become a

commonplace among corporations, despite the fact that its completely voluntary

adoption is still defended by the Commission.

b) A multilateral forum was proposed at a regional level to evaluate transparency

and convergence of CSR tools and practices.

c) Precisely for that reason, the Commission realised that an important work was

needed towards convergence and transparency in order to build a reliable and

459 J. LUX, S. SKADEGAARD THORSEN and A. MEISLING: “The European Initiatives”, in R. MULLERAT: op. cit., pp. 325-348, at p. 332. 460 F. BORGIA: op. cit., pp. 150-151. 461 COM (2002) 347 Final, 2 July 2002, on Corporate Social Responsibility: A Business contribution to Sustainable Development.

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credible system to really reflect –internally and externally- the benefits of CSR.

The EU could serve as intermediator and coordinator of these information

systems, moderating the debates to make the advancements effective.

d) CSR had to be integrated in all EU policies. This is an absolute novelty; it is true

that the Gothenburg European Council already provided the insertion of social

and environmental concerns in any European action, but the Commission took a

substantial step forward mentioning expressly CSR as such in any EU policy,

included the external action.

As can be seen so far, after the first impulse of the different European Councils cited

above, the inter-institutional dialogue has mainly taken place between the Commission

and the Parliament. The Green Paper and 2002’ Communication undoubtedly

constituted steps forward, but the Parliament issued a new report making some remarks

to the Commission. The debate on voluntariness was closed and the Parliament admitted

that CSR is necessarily voluntary, but the Parliament did not shy away from

“emphasis[ing] that companies should be required to contribute to a cleaner

environment by law rather than solely on a voluntary basis” 462, thus a bit frustrated with

an essential aspect of the definition of CSR. We have noted in the general part of this

work that CSR has evolved into a mix of hard and soft law, well beyond mere

voluntariness, but by 2003 the EU was still in its way to reach that conclusion. In any

case, the Parliament seemed to be satisfied in the overall with the Commissions’

approach, calling for an effective and quick implementation of the proposed measures,

in particular the eco and social labels, the launching of the multi-stakeholder forum, and

some new ideas such as a register of blacklisted companies463, sadly forgotten

afterwards. The Parliament’s report annexes the opinion of different Committees, of

which we might highlight the Industry, External Trade, Research and Energy which

demands a greater engagement within the WTO negotiations as well as launching a

Global Convention on Corporate Accountability464.

Before the entry into force of the Treaty of Lisbon in December 2009, we might say that

CSR emerged and started to consolidate at a European level. The following initiatives

didn’t add much to the previous corpus. Between 2005 and 2006, the Commission made

462 EUROPEAN PARLIAMENT: Report on the Communication from the Commission concerning Corporate Social Responsibility: A business contribution to Sustainable Development (COM(2002) 347 -2002/2261 INI), Final A5-0133/2003, 28 April 2003, para. 3. 463 Ibíd., p. 10, para. 29. 464 Ibíd., p.16, para. 9 and 12.

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some efforts to recover the spirit of the European Council at Lisbon. For example, a

new Communication in 2006 renewed the commitment with CSR, essentially repeating

the wording and priorities, but advancing in the international or external dimension of

CSR465, also tightly related to UN MDG’s and the work of the SGSR John Ruggie,

newly appointed in 2005466. Again, the Parliament’s response is centred on the

complementarity of compulsory and voluntary measures. The EP realises that the

proliferation of codes of conduct without clear guidelines and common criteria can

cause confusion, and that the European debate was stagnating and needed a “shift from

‘processes’ to ‘outcomes”467, without giving away any of the previous considerations on

the extraterritorial liability of EU-based companies as a complement to make CSR more

effective.

For those particularly sceptic on the potential of this work, even at this first stage before

the decisive impulse after 2009, all this soft law permeated for example, timidly but

clearly, in two Directives regarding the annual reporting of certain companies and

financial institutions, which included unprecedented references to social aspects. It is

said that “where appropriate, this should lead to an analysis of environmental and social

aspects necessary for an understanding of the company’s development, performance or

position”468 consistently with Recommendation 2001/453/EC. In 2006 a Directive of

the Commission reiterated this approach on “environmental and social aspects” and

further required (amending Directive 78/660/EEC) that Companies may provide in their

annual report with a corporate governance statement, disclosing the corporate

465 “The Commission recognises the linkages between the uptake of CSR in the EU and internationally, and believes that European companies should behave responsibly wherever they operate, in accordance with European values and internationally agreed norms and standards”, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee: Implementing the Partnership for Growth and Jobs: making Europe a Pole of Excellence on Corporate Social Responsibility, COM (2006) 136 final, 22 March 2006, p. 5. 466 The appointment of John Ruggie took place in 2005 and is likely to be another reason why the Commission re-examines CSR trying to revitalise the efforts without much success between 2006 and 2009. 467 EUROPEAN PARLIAMENT: Report on corporate social responsibility: a new partnership (2006/2133 INI), Final A6-0471/2006, 22 December 2006, para 4. The main ideas of this Report were included in the Resolution of 13 March 2007 on corporate social responsibility, a new partnership (A6-0471/2006 / P6_TA-PROV(2007)0062). 468 Directive 2003/51/EC, 18 June 2003, on the annual and consolidated accounts of certain types of companies, banks, and other financial institutions and insurance undertakings, recital 9. This recital is consistent, within the same Directive, with article 1, item 14 (amending previous Directive 78/669/EEC) which states that “to the extent necessary for an understanding of the company’s development, performance or position, the analysis shall include both financial and, where appropriate, non-financial key performance indicators relevant to the particular business, including information relating to environmental and employee matters” (emphasis added).

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governance code to which they are subject, or the one to which they have voluntarily

adhered, as well as the “corporate governance practices applied beyond the

requirements under national law”, or in absence of all these, when “the company has

decided not to apply any provisions of a corporate governance code […], it shall explain

its reasons for doing so” (emphasis added)469. Despite the obvious interest of this early

permeation into hard law instruments, we share only to a limited extent the view of

many academics that are only interested in CSR in the EU because of its possible

compulsory character ad futuram470; even its voluntary elements can contribute to

complement legal obligations (provided these exist). We move somewhere between

“complying” and “explaining” requirements. Perhaps there is a lack of clarity in the

European corporate governance codes, and this initial regulation might be less

demanding than in the US471, but we should keep in mind it is a highly complex on-

going process in which the Commission understandably leaves more room for the

margin of appreciation of Member States.

From this documentation we infer that the inter-institutional feedbacks have vivified the

development of CSR in the EU. The terms of the debate between the Parliament and the

Commission confirms the early global vocation of CSR in the EU at the same time it

continued to be internally consolidated. In any case, social concerns and the potential of

corporate responsible practices had a rapid reflection in civil society organisations and

companies. The awareness on social and environmental impacts of the market economy

quickly spread and, after this first institutional push, we might hypothesize that –again

in the European history, private actors and civil society took over and has, for a long

time, been ahead of the institutional initiatives. A good part of the progress made

recently is thanks to the private initiative, particularly in social issues, environmental

protection and respect for human rights, trying to contribute to sustainable development

as indicated after Gothenburg, not only in Europe, but also in third countries in which

companies operate (mainly least developed countries).

469 This affects companies whose securities are admitted to trading on a regulated market and which have their registered office in the Community. Directive 2006/46/EC, 14 June 2006, on the anual accounts of certain types of companies, recital 10 and article 1, item 7. 470 B. HORRIGAN : Corporate Social Responsibility in the 21st Century. Debates, Models and Practices among Government, Law and Business, United Kingdom 2010, Edward Elgar Pub. Ltd., pp. 187-188. 471 B. SOLTANI and C. MAUPETIT : “Importance of core values of ethics, integrity and accountability in the European corporate governance codes”, in Journal of Management and Governance(Springer Ed.), May 2015, Vol. 19, Issue 2, , pp. 259-284, at pp. 273-280.

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In this first phase of emergence of CSR at a regional level, and despite the usual inter-

institutional battles and the lack of originality, the first European contribution is to have

strengthened its link with general human rights issues and global development goals,

while internally clarifying and progressively specifying its content. To sum up, the first

phase of emergence and definition of CSR in the EU did not incorporated new

components but interestingly evolved from a limited concern ad intra to a wider

development goal.

3.1.2. A new impulse after 2009

With the entry into force of the Treaty of Lisbon in December 2009 the debate on CSR

slightly changes. For instance, article 2 of the TEU clearly settles the “values” of the EU

in terms of democracy, rule of law, respect for human rights and justice. The global

dimension of CSR finds support in articles 21 and 205 of TFEU extending these values

to the Union’s external action. Particularly interesting is the accuracy and level of detail

of item 1 of art. 21 TFEU referred to the “universality and indivisibility of human rights

and fundamental freedoms”, assuming by the way, at a Treaty level, the evolution and

consolidated practice of international human rights law as we have studied previously.

After 2009 the Treaties’ provisions are therefore consistent with CSR conception under

which internal improvements have little sense if they are not accompanied by an

international dimension, according to the Union’s external commitment to “consolidate

and support democracy, the rule of law, human rights and the principles of international

law” (art. 21.2 TFEU). The mention to general international law is an open window, as

argued with regard to trade and investment agreements472, to introduce human rights as

a common interest of the international society. Besides, but not surprisingly, the general

provision on the EU external action (item 2 art. 21 TFEU) provides us with a list in

which we find both human rights and the promotion of economic development, if we

read these articles together with art. 3 TEU enshrining the European social vocation and

article 11 TFEU on the environment and sustainable development.

As explained, after a few years of relative stagnation (2006-2009) or without significant

news in this regard, one of the most interesting initiatives came in 2009 when the

472 See Chapter II, Section 2.

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European Commission launched a call for tenders to study ‘the legal framework with

respect to human rights and the environment applicable to European companies

operating outside the EU’, in order to know on what basis the work had to be done to

join Ruggie’s efforts and effectively advance in that direction.473 The result was the

Study of the Legal Framework on Human Rights and the Environment Applicable to

European Enterprises Operating outside the European Union, made by the University

of Edinburgh in 2010.474

It is also important to cite a second comprehensive study, entitled Responsible Supply

Chain Management Potential Success Factors and Challenges for Addressing

Prevailing Human Rights and Other CSR Issues in Supply Chains of EU-Based

Companies (2011)475, carried out under the EU Programme for Employment and Social

Solidarity (PROGRESS, 2007-2013). One of the differences after 2009 is that research

funds are allocated to CSR issues, perhaps nurturing endless theoretical discussions

without focusing enough on concrete outcomes, but also informing the institutions. Both

studies have a very technical and legal approach, devoting much space and interest to

binding aspects, but showing as well to a certain extent the interaction between soft and

hard law and the way they complement each other476.

Concreteness is precisely the spirit of the EU Parliament’s Report on corporate social

responsibility in international trade agreements, together with the Committee on

International Trade, issued in 2010477, where we find the proposal to incorporate CSR

into the generalised system of preferences, CSR clauses in all EU trade agreements (as

in the South Korean precedent), and make EU-based companies accountable for

eventual breaches of human rights or environmental hazards when they operate abroad

escaping European standards (again, according to a progressive interpretation of the

Brussels Convention). The appointment of John Ruggie and his main contribution, the

473 DO 2009/S 131, 11/07/2009. Call for Tenders ENTR/09/045 –Study of the legal framework on human rights and the environment applicable to European enterprises operating outside the EU. 474Available at : http://ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/101025_ec_study_final_report_en.pdf 475 This was a very comprehensive research including up to 12 case-studies. http//ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/final_rscm_report-11-04-12_en.pdf 476 The potential of soft law in the EU is studied below (see Chapter IV, Section 1). 477 EUROPEAN PARLIAMENT: Report on corporate social responsibility in international trade agreements (2009/2201(INI)), EP reference A7-0317/2010, 11 November 2010.

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UN Guiding Principles on Business and Human Rights (studied in the first part of this

work), also renewed the interest in this subject at a European level.

However, if the Parliament is always complaining and pushing for further

advancements, it sometimes sins of impatience, as shows the example of Regulation

(EC) 1221/2009 of 25 November 2009 on the voluntary participation by organisations

in a Community eco-management and audit scheme (EMAS). EMAS was an important

new tool in the area of environmental impacts, which constitutes a kind of voluntary

collective self-control system with an institutional supervision including, basically, the

obligation to provide sound information. By way of little criticism, we shall recall that

the environmental protection in the EU and in International Law is in advance, so that

such a mechanism –being a sign of hope– is still not likely to exist in other sectors.

2009 is also a turning point as the 2007/2008 financial crisis, converted into a public

debt crisis and finally a full economic crisis for more than five years, also raised the

awareness on the human rights and social risks of globalisation following to the de-

regulatory enthusiasms since 1991. Europe 2020 Strategy reflects this situation, being

EU institutions seriously concerned by the speed with which the recent economic

growth was being reversed, the rising unemployment (becoming structural) and the lack

of demographic relieve and the impotence of the financial sector. In essence, it seemed

clear that recovery had two pillars: growth, certainly, but also social relieve (even

though the structural reforms promoted by the Troika were initially centred on the

alleviation of the debt crisis leaving aside many social concerns). Anyway, the fact is

that the EU 2020 Strategy is peppered with social issues and the Commission declares

its commitment towards a new updated approach to CSR, considered a “key element” to

ensure a durable recovery, in addition to go on extending CSR codes and practices

among businesses478.

This statement of intent is singularly translated into the Renewed EU Strategy 2011-14

for CSR. First of all, the three-fold analysis proposed by Ruggie has been accepted in

the EU, that is, the UN three level framework (to “protect, respect and remedy”) is read

as “identifying, preventing and mitigating” in this new approach to CSR: obvious is the

State duty to protect, as the corporate duty to respect, and the need of effective

478 COM (2010) 2020, 3 March 2010, Europe 2020. A strategy for smart, sustainable and inclusive growth, pp. 15-16.

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remediation mechanisms (judicial or non-judicial). CSR is founded on this basic

understanding, but is no limited to that as it goes beyond.

The Renewed EU Strategy for 2011-14 gives us a new definition of CSR: it is no longer

the voluntary incorporation of social concerns in the business activity, but directly the

“responsibility of enterprises for their impacts on society”479, underpinning all Europe

2020 objectives, always respecting the international frame where the Commission adds

references to the latest instruments (the UN Guiding Principles and the Global

Compact). Moreover and not less important, there is a shift in the wording: it is no

longer a ‘framework’, but a ‘strategy’, including self and co-regulation procedures,

consultation to all businesses (extended to SME’s), shareholders, stakeholders (mainly

CSO’s and NGO’s) aimed at launching a specific agenda for action. Finally, it is our

understanding that the Commission was not wrong when giving such a crucial role to

information on CSR and reporting measures to serve as solid foundations to continue

working.

3.2. CSR: mainstreaming EU Policies

The Commission released in March 2014 an implementation table480 that needs to be

clarified and updated, partly thanks to a more recent Staff Working Document481. The

table identifies up to eight areas in which the CSR agenda is being implemented:

enhancing visibility and disseminating good practices; improving and tracking trust in

business; improving self and co-regulation processes; enhancing market reward

(through public procurement reforms, consumption patterns and investments);

disclosure of social and environmental information; CSR in training and education;

national and sub-national CSR policies; and a better aligning of EU and global

approaches (principles, guidelines, other international organisations and third countries).

479 COM (2011) 671 Final, 25 October 2011: A Renewed EU Strategy 2011-14 for Corporate Social Responsibility, p. 6 (para. 3.1). Available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:20110681:FIN:EN:PDF 480 Not an official document. Accessible at http://ec.europa.eu/growth/industry/corporate-social-responsibility/index_en.htm (PDF link “detailed table showing progress in the implementation of this agenda”). 481 SWD (2015) 144 Final, 14 July 2015, on Implementing the UN Guiding Principles on Business and Human Rights –State of Play.

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Instead of using the categories chosen by the Commission to present the different

initiatives undertaken so far, we rather propose a functional criterion to divide them into

three different items: a) information on CSR and its promotion; b) institutional and

international initiatives; and c) actions with an eventual or already effective impact on

EU Law. Without obviously undervaluing the first two areas of action, we will pay a

greater attention to the latter, as it will indicate the extent to which CSR should be taken

seriously, even by sceptics. We will first analyse the informative and promotion actions,

followed by the institutional and international approaches, before considering the legal

spill-overs, in order to put some order into widely dispersed initiatives.

Is CSR a new policy in the EU? The following analysis shows, on the one hand, that

CSR has emerged as a strong crosscutting concern and, in this sense it would deserve to

be considered as a new policy in its own right, especially after 2009. On the other hand,

more than a policy as such, the wide dispersion and sometimes disconnection between

the different actions suggest that it has become a new governance tool that has emerged,

meant to mainstream almost any EU policy, hailing from development and cooperation

programmes to commercial policies, public procurement regulation, company law or

trade and investments.

The CSR precedents might confirm this definition as a mainstreaming governance tool

rather than a policy per se, since CSR issues can be traced back even before it received

that name and was properly labelled, starting with three basic origins: the environment

and work and consumers’ policies. EU institutions have “long been renowned for their

“implicit CSR” much before the concept of CSR was even discussed in an explicit

manner”482. There is no difficulty in making emerge CSR when it comes to consumer’s

protection: suffice it to say that, as early as 1984 a Council Directive addressed

misleading advertising,483 which later has become a typical CSR related issue,

combining hard regulations and the industry self-control under the name of unfair

commercial practices484. An unlabelled and implicit CSR can easily be traced in a

number of early directives concerning the environment and related issues, even public

contracts, comprising reporting requirements, public disclosure and access to

482 M. A. CAMILLERI: “Environmental, social and governance disclosures in Europe”, in Sustainability Accounting, Management and Policy Journal, Vol. 6 (2015) No. 2, pp. 224-242, at p. 226. 483 COUNCIL Directive 84/450/EEC, of 10 September 1984, relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising. 484 COM (2013) 138 Final, 14 March 2013, on the application of the Unfair Commercial Practices Directive. Achieving a high level of consumer protection. Building Trust in the Internal Market.

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information, due diligence measures and previous impact assessments485. More recently,

the common agricultural policy, the fisheries policy and transport policy have also

implicitly incorporated this approach in their actions and objectives. As an example we

could cite the increasing importance given to the safety of food and to protection of the

environment in the CAP and its slow but constant liberalisation. In addition, we will

have to pay special attention to the environmental policy, the development cooperation

policy, the commercial policy and the neighbourhood policy. In summary, the wide

dispersion of the initiatives on CSR and, ultimately, the relative “confusion is perhaps

due to the fact that the EU did not wait for the advent of CSR to deal with diligence

obligations of organisations or companies with regard to their environmental, social or

societal responsibility”486.

Whether a new policy or a transversal governance tool, the fact is that the Commission

has turned CSR into a new instrument to go on fostering the integration of the internal

market, convergence and transparency, mainstreaming many policies in line with

sustainable development and human rights goals as a general interest of the

international society (and, as explained elsewhere in this work, a priority confirmed

with the Treaty of Lisbon).

3.2.1. Implementation of the CSR agenda: information and promotion

After 2009, the EU rightly realised that any effort to foster CSR had an inescapable

starting point: information and promotion. Sound information, dissemination of good

practices and exchange of experiences are the three pillars of an active publicity, which

sometimes includes reporting mechanisms. Obtaining and disseminating information

485 For example, in Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora, Directive 94/62/EC on packaging and packaging waste, Directive 2001/42/EC of the European Parliament and the Council on the assessment of the effect of certain plans and programmes on the environment, Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emissions allowance trading within the Community and amending Council Directive 96/61/EC, Directive 2004/35/EC of the European Parliament and of the Council on environmental liability with regard to the prevention and remedying of environmental damage, and Directive 2008/98/EC on waste or Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment. The European Parliament has already shown the CSR-related aspects of the aforementioned directives as a precedent: EUROPEAN PARLIAMENT –Directorate General for Internal Policies: Corporate Social Responsibility. Identifying what initiatives and instruments at EU level could enhance legal certainty in the field of corporate social responsibility, PE462.464, 2012, pp.43-52. 486 Ibíd., p. 43.

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(through reports, working papers, surveys and studies) is an essential step to promote

CSR.

The Commission has focused on obtaining the best available information on CSR in

order to disseminate and promote good practices. The informative and institutional

efforts of the Commission are then tightly related to the promotion of CSR. The

philosophy could be simply summarised in a sentence: before assessing the state of play

we need to know the playing field.

A comprehensive Eurobarometer survey on CSR, undertaken in 2013487, showed that

local businesses and SME’s apparently do a better job than large companies. Moreover,

in the context of the crisis, 39 % of the 32,000 respondents consider that companies do

not take seriously their impact on society whereas almost exactly the same proportion of

respondents (40%) thinks the opposite. Citizen’s view on CSR is positive in the overall,

as it is said to contribute to get out of the crisis, even though the crisis would erode it

and discrimination in employment remains a concern in public opinion488.

More interestingly, the extent to which the work of the EU and other international

organisations has permeated business practice seems still low. A study on 200 randomly

selected large companies reveals openly improvable results489. Even if 68% of

companies refer to CSR (or similar definitions) and 40% cite at least one internationally

recognised CSR instrument, the sample indicates two major limitations: first of all, a

very shy third of the sampled companies comply with the Commission’s request to refer

to at least one of the main instruments (the UN Global Compact, OECD Guidelines for

Multinational Enterprises or ISO 26000); but secondly, only five companies (2’5 % of

the sample) do cite the UN Guiding Principles on Business and Human Rights, very

illustrative percentage that shows the lack of a consolidated human rights approach to

CSR, to overcome the strong inertia to consider it a mere marketing strategy.

Besides, in contradiction with citizens’ perception shown by the above-cited

Eurobarometer (more doubtful about the engagement of larger companies), according to

487 EUROPEAN COMMISSION: Flash Eurobarometer 363. How Companies Influence our Society: Citizen’s View, Report, Brussels (April 2013), 134 pp., passim. Available at: http://tinyurl.com/q4a2mt7 488 EUROPEAN COMMISSION: Flash Eurobarometer 393. Discrimination in the EU in 2012, Report. Brussels (November 2012), 238 pp. Available at: http://tinyurl.com/bv2zpqc 489 EUROPEAN COMMISSION: An Analysis of Policy References made by large EU Companies to Internationally Recognised CSR Guidelines and Principles, Brussels (March 2013), 19 pp., at pp. 6-7 (for the data discussed).

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this study on 200 enterprises it seems that those over 10,000 employees would

paradoxically be three times more likely to refer to different international standards, in

comparison with smaller companies (between 1,000 and 10,000 employees). The

Commission interpreted that smaller companies needed a particular guidance and has

issued a number of documents addressed at SME’s in 2013, that range from the

handbook “My Business and Human Rights” (very correctly emphasizing the centrality

of human rights in CSR490), to the publication of a six pages study of five SME’s –of

questionable usefulness- entitled “De-mystify Human Rights for Small and Medium-

sized Enterprises”.

Without contesting the importance of fostering CSR amongst SME’s, which constitute

the majority of EU’s business fabric491, we do not consider it a problem of

“mystification”. The Commission’s focus on SME’s is right, but the statistics showing

their apparently lower level of engagement might have in fact a different origin,

especially if citizen’s perception is the opposite. A simpler explanation should take into

consideration the logically lower accounting requirements for SME’s and their reduced

communication strategies, what does not necessarily mean that SME’s are actually less

committed or socially responsible at a local or community level492; bigger companies

are usually keener and much more interested in communicating their CSR thanks to

structured media and information departments. In 2014 the EC finally noticed this

“fallacy” 493.

The informative and promotion strategy in the form of studies and reports is, in many

cases, the output of networking events organised by the Commission, who has the

capacity-building know-how and the institutional structure to make them possible. For 490 EUROPEAN COMMISSION: My Business and Human Rights. A guide to human rights for small and medium-sized enterprises, Brussels (March 2013), 28 pp. 491 According to the latest available data of 2013/2014, 99’8% of all companies in the EU are SME’s, responsible for the 66’9% of employment, while large companies constitute 0’2% and employ 33’1 % of the active population. In terms of total value added at factor costs in the EU, SME’s are 16’2 percentage points above large companies. EUROPEAN COMMISSION: A partial and fragile recovery. Annual report on European SME’s 2013/2014, Brussels (July 2014), p. 15. 492 C.D. DITLEV-SIMONSEN, H. von WELTZIEN HOIVIK and O. IHLEN: “The historical development of Corporate Social Responsibility in Norway”, in S.O. IDOWWU, R. SCHMIDETER and M.S. FIFKA (Eds.): Corporate Social Responsibility in Europe. United in Sustainable Diversity, Switzerland 2015, Springer Ed., pp. 177-196, at pp. 190-191. 493 “At the same time it must be noted that it is a fallacy to assume that SME’s and micro-companies necessarily have a lower awareness of CSR issues. With their close ties to their local communities such small businesses often have a heightened awareness of their social responsibility in the local context, whether or not any initiatives taken are officially labelled as CSR or not”. EUROPEAN COMMISSION: Corporate Social Responsibility. National Public Policies in the European Union, Compendium 2014, Brussels 2014, p. 14.

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example, still on the subject of SME’s, a handbook for advisers was published in 2013

after a meeting held 11-12 June 2012 attended by 100 advisers494.

We can observe that meetings with stakeholders, CSO’s and experts usually lead to the

publication of studies. A good example is the report “Helping consumers make informed

green choices and ensuring a level playing field for business”, which was the result of a

multi-stakeholder dialogue presented at the European Consumer Summit in March

2013. It gave us some clues on the evolving Commission’s opinion on unfair

commercial practices in relation to environmental standards: the so-called “green-

washing”, misleading advertising, the reliability of eco-labels and the self- and co-

regulation problems. Also under the initiative of the DG SANCO (Health and

Consumers), there is work in process to extend the range of products covered by these

studies, such as non-food products, second hand cars, electricity or children and the

internet, always through several multi-stakeholders dialogues on environmental claims

that may delay their publication.

In a different area, meetings have also been very frequent with “CSR Europe”, one of

the most prominent business-lead organisation in the EU with 70 corporate members

and 41 national CSR organisations495, leader of the private programme Enterprise 2020

aimed at completing the Europe 2020 Strategy with the point of view of entrepreneurs

after two meetings with Commission’s representatives in September and November

2012, to be added to its participation in the numerous multi-stakeholders dialogues

organised in Brussels. Also important, but for the moment less active in the EU, is

UNPRI496, an investors’ initiative on Socially Responsible Investments (SRI’s) in

partnership with the UNEP Financial Initiative and the UN Global Compact, who is

more and more involved in negotiations and dialogues with the Commission.

Networking events have covered a variety of matters, like the CSR dimension of youth

and employment497 or active ageing and mental health at workplace. In cooperation with

494 EUROPEAN COMMISSION: Tips and Tricks for Advisors. Corporate Social Responsibility for Small and Medium-Sized Enterprises, Brussels 2013, 31 pp. 495 European Business Network for Corporate Social Responsibility: see www.csreurope.org Even though it is a frequent interlocutor of the Commission, shall we recall that its 70 corporate member represent a very small proportion of all EU companies according (see footnote 97). 496 This private initiative has, at the date of closing this thesis, 286 asset owners, 911 investment managers and 193 professional service partners among its signatories. However, we shall bear in mind that this still constitutes a small proportion of all EU Companies. See www.unpri.org 497 Seminar on Youth, Entrepreneurship, volunteering and CSR, organised in September 2012. Other examples related to youth is the Partnership 2020 within the “Youth in Action Programme”, which also

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“CSR Europe”, the Healthy Aging Conference led to a 20 pages study completed in

May 2013 and co-funded by the Commission, and –interestingly enough– it warns that

the environmental concerns need to be completed with labour issues in CSR policies498.

We have already noted that the environmental protection has traditionally been ahead

with respect to general human rights and CSR; nevertheless, we have to keep in mind

the risk that the environment monopolise CSR, which is evidently a quite wider field.

Apart from statistics, surveys and short studies following to these networking events or

experts’ meetings, the Commission further allocates funds for research to obtain more

rigorous information upon which it can build a more credible promotion of CSR. We

have already cited, because of their prominence, the Study of the Legal Framework on

Human Rights and the Environment Applicable to European Enterprises Operating

outside the European Union, made by the University of Edinburgh in 2010499 and the

study on Responsible Supply Chain Management Potential Success Factors and

Challenges for Addressing Prevailing Human Rights and Other CSR Issues in Supply

Chains of EU-Based Companies (2011)500, carried out under the EU Programme for

Employment and Social Solidarity (PROGRESS, 2007-2013).

Other co-funded research projects have a more practical vocation, such as the European

Apparel and Textile Confederation and Industry-All (a European Trade Union) tool to

assist SME’s and, in general, the textile industry when operating abroad: it consists of

country-by-country assessments, including mathematic and qualitative factors inspired

on the ISO 26000, to inform on the main human rights risks for the textile industry,

particularly chemicals and pollution. After a period of refinement, it is aimed to be

made available as an online tool at the end of 2016501. Also very pragmatic was the

includes the project “CSR in Europe: Prince, Merchant and Citizen as one”. The latter consisted of a 17 months project to disseminate CSR among youngsters: it finalised in 2013, was adjudicated to several organisations and CSO’s with experience in youth issues, comprising workshops, seminars, courses that took place in Italy, Poland, Turkey and Portugal, all financed by the Commission. 498 We refer to the SWOT Analysis Report “Joint Action on Mental Health and Well-Being. Mental Health at the Workplace”, 20 pp, at p. 16. Available at: www.mentalhealthandwellbeing.eu 499 Available at : http://ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/101025_ec_study_final_report_en.pdf 500 This was a very comprehensive research including up to 12 case-studies. http//ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/final_rscm_report-11-04-12_en.pdf 501 SWD (2015) 144 Final, 14 July 2015, on Implementing the UN Guiding Principles on Business and Human Rights –State of Play, p. 12.

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approach of a more general project, financed under the Seventh Framework Programme,

to assess the impact of CSR, in quantitative and qualitative terms502.

Further resources have been allocated to the European Multistakeholder Platforms on

Corporate Social Responsibility in relevant business sectors, which have been

adjudicated for instance in the fruit juice, machine tools and social housing sectors,

besides a specific DG Connect platform called “ICT4Society” to coordinate CSR issues

in the ICT.

Other sectors have also been covered: to foster the so-called “socially responsible

investments” (SRI’s) the Commission co-funded with the UN Global Compact and

UNEP, a capacity building project on the integration of non-financial information into

investment decisions, lastly published in February 2013 by UNPRI –a private investors

initiative on SRI’s503.

Finally, the Commission commissioned the publication of three sector-specific

guidelines: on employment and recruitment agencies, information and communication

technology and oil/gas companies, to better inform on the implementation of the UN

Guiding Principles adapted to the particularities of these types of companies, always

after large consultations504. Even if there is no innovative approach and the EU keeps on

recognising the leadership of the UN principles and guidelines, the contribution again is

its unwavering human rights approach and its dissemination and promotion efforts.

Networking meetings and conferences, co-funding research projects and their output in

the form of reports, in sum, reliable information, is the very cornerstone of the EU’s

promotion strategy of CSR. As we have seen, the Commission has played a leading

role, culminated with the organisation of the first “CSR Awards” in 2013, to round off

this informative and promotion work, while raising its visibility.

502 See www.csr-impact.eu. Unfortunately, apart from general information, the website has been emptied once finalised the project so that there is no public access to documents and conclusions. 503 Principles for Responsible Investment Initiative –ESG Integration Working Group: Integrated Analysis. How investors are addressing environmental, social and governance factors in fundamental equity valuation, 27 pp. Available at: http://tinyurl.com/pgqbdds 504 Shift and the Institute for Human Rights and Business were commissioned to write all three guidelines cited: EUROPEAN COMMISSION: Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013), 91 pp.; Id.: Employment and Recruitment Agencies. Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013), 96 pp.; and Id.: ICT Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013), 98 pp. All three are available for free at http://bookshop.europa.eu.

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3.2.2. Implementation of the CSR agenda: international and institutional aspects

The information and promotion initiatives are further articulated by an institutional

commitment outside the EU, confirming the global and developmental dimension of

CSR after 2009. No need to repeat the institutional willingness ad intra, behind all

consultations and initiatives studied in the previous section (informative and promotion

strategies), to which we shall only add, because of its institutional importance ad extra,

the creation of the Council Working Group on Human Rights (COHOM) to monitor the

Action Plan on Human Rights and Democracy (2012-2014), principally addressed to the

EU institutions themselves and Member States, annexed to the more general EU

Strategic Framework on Human Rights and Democracy adopted in June 2012. The main

task of COHOM is to coordinate and ensure the consistency between the external and

internal actions of the EU, carrying out an important bilateral and multilateral work but

also, inside the EU, encouraging Member States to adopt national action plans.

Everything suggests that human rights will continue to mainstream, more or less

effectively, the institutional work of the EU and, obviously, with regard to business and

human rights in its external relations505.

From a formal and political perspective, business and human rights have been fully

incorporated into the agenda of the EU Special Representative for Human Rights in

bilateral meetings, particularly with Latin America (Mexico, Brazil, Peru, Colombia and

Ecuador), Asia (China and Indonesia) and Africa (especially South Africa). In the EU

relations with third countries, it is worth citing the EU-US Human Rights Dialogue in

2012, which considered the implementation of the UNGP’s. The EU has similarly

addressed CSR in the first meeting of the EU-Korea Committee on Trade and

Sustainable Development, or on the occasion of other bilateral meetings, such as the

EC-Turkey sub-committee on Industry and Trade and the EU-Chile Association

Committee meetings.

It is worth stopping a moment at the EU-Chile Association Agreement, which states that

“The Parties remind their multinational enterprises of their recommendation to observe

505 JOIN (2015) 16 Final.

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the OECD Guidelines for Multinational Enterprises”506. Despite its inclusion as a

political declaration of difficult enforcement507, annexed to the Agreement itself, its

significance is undeniable in the consolidation of a corpus of soft international norms.

In any case, most of the literature passes over the fact that the Agreement itself includes

a clear reference to CSR, even if it does not use this term, but a circumlocution when

art. 18 c) mentions “transparency, good regulatory practices and the promotion of

quality standards for products and business practices”, apart from more typical explicit

human rights references in articles 1, 12, 16 and 44. Article 44 is particularly

noteworthy, since it covers social cooperation with elements that are now considered

part of the definition of CSR508.

Bilaterally speaking, trade and development are now intertwined in the EU negotiations.

The trade and development policies, highly bureaucratised, have suffered some changes

in the same direction, i.e., including unprecedented dialogues and strategies with third

countries, with which CSR is being consolidated as a recurrent item on the agenda. The

European Instrument for Democracy and Human Rights included in its 2012 and 2013

Action Plans the promotion of trade unions and social dialogues in third countries. It is

since 2012 that the Commission issued a Communication in which it started to take into

account CSR and private actors in the development and trade policies to stimulate

responsible business practices509. The Council’s reaction to the Commission’s

Communication was very prompt agreeing with the “crucial role of the private sector”

and the importance of “partnerships between the private and public sectors” and

“dialogue with civil society”, therefore supporting the inclusion of innovative green and

506 EUROPEAN COMMUNITY: “Agreement Establishing and Association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part. Final Act. Joint Declaration concerning Guidelines to Investors”, Official Journal of the European Communities, L. 352, 30 December 2002, p. 3. 507 A. BONFANTI: Impresse Multinazionali, diritti umani e ambiente: profili di diritto internazionale pubblico e privato, Milano 2012, Giuffrè Ed., pp. 108-109. 508 Art. 44 of the Agreement prioritises “vulnerable and marginalised social sectors”, “women”, “working conditions, social welfare and employment security”, SME’s, “social and environmental vulnerability[ies]”, “social dialogue” and “human rights”. Article 45 specifically addresses gender equality. 509 “Corporate social responsibility also plays an increasing role at the international level as companies can contribute to inclusive and sustainable growth by taking more account of the human rights, social and environmental impact of their activities. We encourage companies to sign up to the internationally recognised guidelines and principles in this area […]. We also include provisions in our agreements to promote responsible business conduct by investors”. COM (2012) 22 Final, 27 January 2012, Trade, Growth and Development. Tailoring trade and investment policy for those countries most in need, p. 14.

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social criteria in trade and development policies as part of the EU’s external action510.

The Council reiterated the same idea just a few months later and, if there was any doubt,

it explicitly mentioned the promotion of CSR511.

In this context, the Commission’s new modus operandi in development policies has

definitely incorporated CSR amongst the conditions to be taken into account when

negotiating an agreement, thus institutionally fostering CSR expansion beyond the

EU512. In the EU relations with third States, we note the increasing importance of

ratifying international human rights instruments, labour and environmental standards,

fight against corruption, besides the promotion of CSR programmes in these partner

countries, “encouraging public-private policy dialogues […] to try to increase

willingness among governments and local authorities to engage in open discussions

with private sector representatives”513, with a particular focus on disadvantaged groups.

A practical and relatively successful example is the SWITCH-Asia Programme towards

sustainable production and consumption patterns, especially addressed at SME’s to

extend good practices and codes of conduct, besides institutionalising the EU-Asia and

intra-Asian cooperation. This model has been copied to other regions without the same

success for instance (SWITCH-Africa Green, SWITCH-MED for Mediterranean

countries, a middle-east partnership with EAP-Green). Their main contribution is the

acknowledgement that changes need to be stimulated also in the demand sector

(consumers), to render more attractive the productive efforts to comply with CSR

510 COUNCIL OF THE EU: Council conclusions. EU’s approach to trade, growth and development in the next decade, 3154th Foreign Affairs Meeting, Brussels, 16 March 2012, para. 16, 22 and 26. (Citation para. 16) 511 “The private sector and trade development are important drivers for development. An enabling business environment and more effective ways of leveraging private sector participation and resources in partner countries as well as increased regional integration, aid for trade and research and innovation will be key to the development of a competitive private sector. This has to go along with promoting labour rights, decent work and corporate social responsibility”. COUNCIL OF THE EU: Council Conclusions. Increasing the impact of EU Development Policy: an Agenda for Change, Brussels, 14 May 2012, Council Doc. 9369/12, para. 9. Similarly, but less explicit: COUNCIL OF THE EU: Council Conclusions. Social Protection in European Union Development Cooperation, 3192st Foreign Affairs Meeting, Luxembourg, 15 October 2012, para. 4. 512 “Adherence to social, environmental and fiscal standards is also considered a precondition for any EU engagement with, or public support to, the private sector”. COM (2014) 263, 13 May 2014, A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries, p. 12. In the same page, Action 10 proposed by the Commission specifically refers to CSR: “Promote international CSR guidelines and principles through policy dialogue and development cooperation with partner countries, and enhance market reward for CSR in public procurement and through promotion of sustainable consumption and production”. 513 Ibíd., p. 14.

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standards, so promoting market rewards for CSR-friendly companies while

consolidating civil society and human rights awareness in developing countries.

In parallel, the European Investment Bank, a major international investor in

development, has updated its Environmental and Social Handbook by the end of 2013

to integrate the UNGP’s among the standards to be considered when making investment

decisions514.

In addition to the EU relations with third States, there is an utterly important multilateral

dimension of this institutional and international work on CSR, remarkably intertwining

trade, development and human rights.

At the level of other regional integration organisations, we could start citing the EU-

African Union (AU) Human Rights Dialogue held in November 2013, a specific EU-

AU Business and Human Rights conference was scheduled for September 2014, taking

advantage of the already organised UN Conference on the same issue in Addis Ababa.

As for the European role in Africa we shall highlight the importance of a shift in

language to overcome allegations of paternalism, fair or not, and the traditional scheme

of conditionalities, which is in part behind the fact that many African countries have

turned their attention to China and other new partners. China’s investments are not

subject to the stricter European standards515; we consider that a wider debate and

dialogue on “business and human rights”, making it clear that they are compatible, can

soften these relations and improve and revitalise the European role in the African

continent (without rejecting basic conditions and similar formulas for EU aid or

investments). 514 The Commission holds 30% of EIB shares, which is “the largest supranational borrower and lender in the world with an annual investment volume of ca. €7 billion per year and the biggest international investor in development policy”. EUROPEAN COMMISSION: Implementing the UN Guiding Principles on Business and Human Rights –State of Play, SWD (2015) 144 Final, 14 July 2015, p. 14. The EIB environmental and social handbook is available at http://www.eib.org/infocentre/publications/all/environmental-and-social-practices-handbook.htm 515 A good summary of the key-ideas that have governed China’s foreign trade and investment policies since the 1990’s at: I. TAYLOR: “China’s Foreign Policy towards Africa in the 1990s”, in The Journal of Modern African Studies, Vol. 36 No. 3, September 1998, pp. 443-460. On a general note, the following study is also very informative: G. SEGAL: “China and Africa”, in Annals of the American Academy of Political and Social Science, January 1992, Vol. 519 No 1 (January 1992), pp. 115-126. There are, besides, many case-studies that confirm this ambiguous role in relation to human rights in Sudan. For information purposes, refer to: D. LARGE: “China and the Contradictions of ‘Non-Interference’ in Sudan” in Review of African Political Economy, Vol. 35 No. 115, pp. 93-106; also víd. S. SRINIVASAN: “A Marriage Less Convenient: China, Sudan and Darfur”, in K. AMPIAH and S. NAIDU (Eds.): Crouching Tiger, Hidden Dragon? Africa and China, Scottsville 2008, University of KwaZulu-Natal Press, pp. 55-85.

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A different problem arises when we face many States’ fragility, or even failure, which is

also a predominantly African problem516 on which the EU could further warn and assist

TCN’s. The Commission is aware that “specific approaches are required particularly for

fragile and conflict-affected countries that are urgently in need of jobs and economic

opportunities to restore social cohesion, peace and political stability”517, even though

more technical and detailed initiatives in this respect are pending to move beyond

institutional good intentions. In 2010 the Cotonou Agreement introduced a new article

11.4 to address States’ fragility, with a general call for multilateral cooperation to

“agree on the best way to strengthen capabilities of States to fulfil their core functions”,

but without really concrete ideas. EU Delegations in third countries are supposed to

advice EU-based companies in this regard as well as help them face the potential human

rights’ risks following to the Delegation’s field experience. The EIDHR is deploying a

network of focal points in EU Delegations, similarly to the OECD “national contact

points”. Coordinated multilateral actions are essential to get closer to any solution. The

international agenda has started with the AU, introducing business and human rights

issues, but needs to be translated into concrete actions in the future.

Indeed, as for the African, Caribbean and Pacific Group of States, the several revisions

of the Cotonou Agreement make it a promising text. The latest revision in 2010 has

added sustainable development goals and further human rights provisions, recognising

both civil and political and economic and social rights with a very positive level of

detail518. Notwithstanding these improvements and new references to the role of private

actors, the link between business and human rights is still under-developed.

Moving to another regional integration organisation, there are on-going negotiations

with the Community of Latin American and Caribbean States (CELAC). There have

been two EU-CELAC Summits (in Santiago –Chile January 2013 and in June 2015 in

516 The most comprehensive study on the phenomenon of fragile and failed States at: C. JIMENEZ PIERNAS: “Estados débiles y fracasados”, in Revista Española de Derecho Internacional, Vol. LXV No. 2 (2013), pp. 11-49. 517

COM (2014) 263, 13 May 2014, A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries, p. 4. 518 Article 9 is one the most comprehensive examples of human rights provisions within a trade, investment and development international agreement, already in its 2005 version. During its 2010 revision, article 1 was amended to cite the Millennium Development Goals and climate change, non-state actors in article 4. EU-ACP Group of States: Agreement amending for the second time the Partnership Agreement between the members of the African Caribbean and Pacific Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000, as first amended in Luxembourg on 25 June 2005, Official Journal of the European Union L 287, 4 November 2010, pp. 3 ff.

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Brussels). The first Summit ended up with a Declaration that formally acknowledged

the importance of coordinating CSR strategies in the two regions. In Latin America

CSR was interestingly linked to the fight against corruption (and the further ratification

of the UN Convention against Corruption)519, in addition to more classical issues as the

support of the Rio +20 agenda, the collaboration to build up a renovated post-2015

engagement520, and to promote socially and environmentally responsible investments

between the two regions521. In fact, two senior official seminars were organised to

follow up in October 2013 and September 2014 with a view to extending the

development of national action plans in both regions, as explicitly reaffirmed in June

2015 within the Brussels Declaration following to the II EU-CELAC Summit522.

The institutional cooperation, initiated with the AU, ACP States and CELAC, is likely

to be extended, if possible in similar terms, to the Association of Southeast Asian

Nations (ASEAN)523 and maybe other international organisations at a regional level.

In any case, multilateral initiatives are numerous: an example with major media

repercussions on an international scale was the tragedy in Rana Plaza (Bangladesh),

after which this country launched the “Sustainability Compact for Continuous

Improvements in Labour Rights and Factory Safety in the Ready-Made Garment and

Knitwear Industry”, with the support of the EU, the ILO and the US.

Also from this multilateral point of view, a comparable project takes place in

Myanmar/Burma to “Promote Fundamental Labour Rights and Practices”, under the

leadership of the EU and the ILO together with the participation of the US, Japan and

Denmark. Myanmar’s trade and development story brings us the opportunity to raise a

captivating case: being a frequent human rights violator, the Commonwealth of

Massachusetts (USA) adopted on the 25 June 1996 restrictive public procurement

legislation against Burma-Myanmar, which indirectly affected any EU-based company

519 EU-CELAC: Santiago Declaration, Santiago de Chile, 27 January 2013, [Council of the EU Doc. 5747/13], para. 37. It is well-known that corruption implies both public and private connivance. 520 Ibíd., para. 41. 521 Ibíd., para. 45. 522 « We commit to increase our joint efforts on corporate social responsibility, and in this context encourage the implementation of policies, National Action Plans and other initiatives aiming at promoting and strengthening the compliance with corporate social responsibility dispositions, principles and processes within the framework of the relevant international fora ». EU-CELAC: Brussels Declaration, Brussels, 11 June 2015, para. 50. (Council of the EU Doc. 9839/15). 523 EUROPEAN COMMISSION: Implementing the UN Guiding Principles on Business and Human Rights –State of Play, SWD (2015) 144 Final, 14 July 2015, p. 20.

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linked to that country (mainly due to trade relations or subsidiary structures). A year

later, the EC brought a formal complaint before the WTO –probably under the pressure

of companies– alleging a violation of articles VIII (B), X and XII of the Agreement on

Government Procurement524. Opportunely enough, the Federal District Court in Boston

annulled Massachusetts’ selective purchase Act so that the EC finally suspended the

proceedings against the USA in Geneva, revealing Europe’s certain degree of cynicism

and “inconsistency”525: at the same time of starting the dispute settlement within the

WTO, the EU had renewed its sanctions against Burma and withdrew it from the

General System of Preferences (GSP).

This case leads us onto the subject of the EU’s international commitment beyond

spontaneous multilateral projects after a disaster or the inter-regional level. It is crucial

to analyse the voice of the EU in global multilateral fora like the WTO. Fortunately,

Myanmar’s case is relatively out-of-date: the EU has realised that GSP can contribute to

extend CSR globally. Beginning with a focus on labour law, the European GSP human

rights requirements are wider and wider reform after reform. The European special

incentive arrangements, including labour and environmental standards, have legal bases

under the GATT Agreement (1994): despite the general Most Favoured Nation rule of

Article I, the so-called Enabling Clause allows tariff preferences towards developing

countries to help them meet their specific “development, financial and trade needs”526 –

it is worth highlighting that it is not restricted to trade and financial problems, but it is

extended to more general development goals.

A very important precedent-setting case brought by India against the EC provided the

opportunity to clarify under which conditions European tariff preferences for

developing countries comply with WTO Law (GATT Agreement in this case). The

WTO Dispute Settlement Body ruled in 2005 that some anti-drugs provisions of the

contested GSP (Reg. 2501/2001) were discriminatory and arbitrary: the Chapeau of art.

524 According the norms of procedure of the WTO Dispute Settlement Body, the EC first issued a Request for Consultations, 20 June 1997 (WTO Doc. WT/DS88/1), and after an initial negotiation the EC directly filed the Request for Establishment of a Panel (8 September 1998, WT/D88/3). 525 A. GATTO: “Corporate Social Responsibility in the External Relations of the EU”, in Yearbook of European Law, Vol. 24 (2005) No. 1, pp. 423-462, at p. 449. 526 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, 28 November 1979, GATT Document L/4903, mainly par. 3 c), 4, 5 and 8. This “Enabling Clause” is considered part of the GATT Agreement in line with paragraph 1 (b) iv) of Annex 1A incorporating GATT 1994 into the WTO Agreement, including “other decisions of the Contracting Parties to GATT 1947”.

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XX b) of GATT was not sufficient to justify a closed list of 12 beneficiaries in the

Drugs Arrangement, apparently excluding other developing countries. In doing so, the

Appellate Body (AB) upheld the Panel’s previous assessment527, but importantly

nuanced the reasoning and reversed some of the Panel’s conclusions: the discriminatory

nature of the Drugs Arrangement did not emanate from the fact that it was not granted

to all developing countries without distinctions, in a restrictive interpretation of the term

“discrimination”. Although agreements under the Enabling Clause do not annul the

necessary respect of non-discrimination between developing countries528, the Enabling

Clause itself also considers the possibility of distinguishing amongst developing

countries under certain circumstances529. According to the WTO AB, paragraph 3 of the

Enabling Clause envisages specific conditions to grant preferential treatment: the

existence of objective criteria to justify different treatment, due to “development,

financial and trade needs”, which “must be assessed according to an objective

standard”. Such criteria can respond to the “[b] road-based recognition of a particular

need, set out in the WTO Agreement or in multilateral instruments adopted by

international organisations, [which] could serve as such a standard”530. The EC Drugs

Arrangement provided a list of 12 beneficiaries without prerequisites, but it did not

detail any positive and objective criteria by which a developing country may qualify for

preferences, so that the EC failed to demonstrate the non-discriminatory nature of the

regulation (the absence of criteria makes it impossible to show it is not discriminatory).

Therefore, WTO law allows distinctions between developing countries: the EC Drugs

527 The final decision was taken in 2004 by the Appellate Body. WTO: European Communities –Conditions for the Granting of Tariff Preferences to Developing Countries. Report of the Appellate Body, 7 April 2004, Doc. WT/DS246/AB/R. 528 One of the Indian arguments held that, in supporting the Enabling Clause, “developing countries did not agree to relinquish their MFN rights as between themselves” (Ibíd., para. 47, pp. 18-19). This is only partially confirmed by the AB: differentiating between developing countries do not automatically constitute discrimination, even though the Enabling Clause does not become a general exception of MFN rule as certain conditions must be satisfied: “India submits that developing countries should not be presumed to have waived their MFN rights under Article I:1 of the GATT 1994 vis-à-vis other developing countries, and we make no such presumption. […]With this in mind, and given that paragraph 3(c) of the Enabling Clause contemplates, in certain circumstances, differentiation among GSP beneficiaries, we cannot agree with India that the right to MFN treatment can be invoked by a GSP beneficiary vis-à-vis other GSP beneficiaries in the context of GSP schemes that meet the conditions set out in the Enabling Clause”. Ibíd., para. 166 (p. 67). 529 The AB understands that “certain development needs may be common to only a certain number of developing countries”. Supra, note 135, WT/DS246/AB/R, para. 160 (p. 65). Furthermore, the AB states that “In sum, we read paragraph 3(c) [of the Enabling Clause] as authorizing preference-granting countries to ‘respond positively’ to ‘needs’ that are not necessarily common or shared by all developing countries. Responding to the ‘needs of developing countries’ may thus entail treating different developing-country beneficiaries differently”. Ibíd., para. 163 (p. 67). 530 Ibíd., para. 163 (p. 66).

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Arrangement was not discriminatory because of that, but because it did not include

‘objective criteria’ on ‘development, trade and financial needs’. The most crucial

progress is the mention of other international organisations to justify the objective

criteria behind preferential treatment systems in terms of “development, financial and

trade needs”.

Anyway, this precedent is essential to lawfully unite development, human rights and

trade in EU Law. Although the EC lost this case, the European GSP schemes were

paradoxically reinforced in terms of international trade law in order to legitimately and

legally cover development concerns, clarifying under which conditions. GSP schemes

can include CSR clauses and requisites, according to internationally recognised

standards, to help raise human rights in developing countries531. More recently, the EU

has actually included sustainable development and (explicitly) corporate social

responsibility in the EU-South Korea Free Trade Agreement (2009) and with Colombia

and Peru in March 2010, so we can truly speak of a “merger of Corporate Social

Responsibility into the EU Common Commercial Policy” 532. The WTO Agreements

have several open windows to which we already referred in the general part of this work

(in this case, the Enabling Clause and art. XX of GATT). The EU can put them into

practice, actually opening those windows, provided that certain legal conditions are met

–which don’t seem colossal or unmanageable.

The EU international commitment to foster CSR and business and human rights

principles can have two major consequences: first, to increase the level of consensus in

this regard within the international society; secondly, to effectively impact the

interpretation of the already available International Law to make changes possible,

without necessarily have recourse to new instruments.

Finally, the UN fora are also a good scenario for more political than technical

statements, also useful if they contribute to advance the state of opinion of the

international society. The EU has always participated with high level representatives to

531 A similar conclusion on the human rights’ potential of the India vs. EC case but by different means: A. GATTO: Multinational Enterprises and Human Rights. Obligations under EU Law and International Law, United Kingdom-USA 2011, Edward Elgar Publishing Ltd., pp. 246-252. 532 O. QUIRICO: “The Merger of Corporate Social Responsibility into the EU Common Commercial Policy”, in European Company Law, Vol. 9 (2012) No. 2, pp. 93-100, at pp. 94-95. According to the author, Parliament’s Resolutions 2009/2201 and 2010/2103 advocate to incorporate, respectively, CSR and climate change into the CCP. However, even if they point in the same direction, we would be cautious as to what extent the Commission will effectively put them in practice.

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support the implementation of the UNGP’s, particularly in all annual Forums on

Business and Human Rights in Geneva (Switzerland). Within the framework of the UN

OHCHR, the EU is collaborating with the project “Accountability and Remedy” to

increase the available information and advice for States on access to justice in cases of

human rights violations involving TNC’s533. Still pending is the cooperation or

adherence to the UN Principles for Responsible Management Education. Despite its

originality as an international organisation, the EU has also acted as such when it

supported the “Montreux Document on pertinent legal obligations and good practices

for States related to operations of private military and security companies during armed

conflict” , which is an highly topical problem, encouraging this way up to 23 EU

Member States to adhere to that document. Moreover, the EU as such has become

member of the Working Group on the International Code of Conduct Association, born

in 2013 in Geneva.

At a totally political level, in June 2015 and during the preparatory meetings of the G7

under the German Presidency, the EU apparently advocated for the inclusion of CSR

issues in the final Declaration534. It is important to note the explicit support of the

UNGP’s and the agreement to “urge private sector implementation of human rights due

diligence”535, placing strong emphasis on supply chains and labour standards (a specific

fund is foreseen in cooperation with the ILO, maybe extended to the G-20

participation).

Sustainable development, the MDG’s, the post-2015 agenda, and human rights are, in

conclusion, the rails of the EU’s institutional actions both inside and outside the EU, but

especially when engaging with third countries and other international organisations or

fora. All in all, there has been an international and institutional implementation of CSR

with an important role played by the Commission, albeit the challenge remains to make

a real impact in the field avoiding leftovers or loose ends.

533 For an analysis of this issue, see Chapter IV, Section 2. 534 EUROPEAN COMMISSION: Implementing the UN Guiding Principles on Business and Human Rights –State of Play, SWD (2015) 144 Final, 14 July 2015, p. 8. 535 G-7: Leaders’ Declaration “Think Ahead. Act Together”, 7-8 June 2015, Schloss Elmau (Germany), p. 6.

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3.2.3. Implementation of the CSR agenda: impact on EU Law

On top of the information/promotion initiatives and the international commitment at an

institutional level, we also find a good amount of actions with a clear impact on EU

Law, sometimes already in place and, in some other cases, with a remarkable potential

ad futuram. In other words, the implementation of the CSR agenda is having important

legal spill-overs in different law-fields.

A number of scandals (WorldCom, Tyco, Enron, Parmalat, Lehman Brothers, and very

recently Volkswagen) together with the financial (and then economic) crisis since

2007/2008, have both favoured a relative reversal of some of the previous neo-liberal

trends. This context explains why corporate governance has been one of the first areas

in which transparency and CSR have emerged. By way of introduction, we find an

unprecedented value judgement in recital 62 of Directive 2013/36/EU of the Parliament

and the Council: “Remuneration policies which encourage excessive risk-taking

behaviour can undermine sound and effective risk management of credit institutions and

investment firms”536. The debate is assured.

A characteristic corporate governance debate lies behind this problematic: modern

capitalist societies have witnessed an increasing separation between owners and

managers, at least in large companies. The power balance between them is a central

issue of corporate governance537, particularly centred on the protection of shareholders.

We can basically study corporate governance from three perspectives: company law,

capital market law and labour law. The evolution apparently shows a monopolisation by

capital market law, a “marketization” of corporate governance whose main criticism

may be the relegation of workers’ rights to vaguer social issues, with blatant examples

in the occasion of takeovers538. From this rather critical view, in interpreting corporate

law “the ECJ has legally reinforced the four freedoms, bypassing a political debate on

536 Directive 2013/36/EU of the European Parliament and the Council, 26 June 2013, on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, Official Journal of the European Union L-176, pp. 338-436, 27 June 2013, at recital 62 (p. 345). 537 The off-cited classic text, from 1932, already pointed to the increasing dispersion of ownership in larger companies creating control problems with the appearance of a more and more autonomous management cast: A.A. BERLE (Jr.) and G.C. MEANS: The Modern Corporation and Private Property, New York 1932, Macmillan, xiii + 396 pp, passim. 538 L. HORN: “Corporate Governance in Crisis? The Politics of EU Corporate Governance Regulation”, in European Law Journal, Vol. 18 No. 1 (January 2012), pp. 83-107, at pp. 94-95.

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the subordination of social policies and rights to capitalist freedoms”539, “within the

broader context of deepening financial market integration in the EU and the dominance

of financial market imperatives”540.

Being partly correct, it seems to us a rather exaggerated conclusion, in light of recent

EU Directives that head to compulsory transparency measures with a wider range of

addressees: “Mandatory reporting in that area can therefore be seen as an important

element of the corporate responsibility of institutions towards stakeholders and society”

(not only shareholders)541. The EU has perfectly taken note of the traps behind

voluntary codes when analysing the misconduct of the financial sector before the

crisis542, and even encourages Member States to go beyond the European incipient

regulations543. In the area of corporate governance, the so-called Accounting Directives

have suffered similar changes544: Directive 2013/34/EU marks a turning point as it

establishes that undertakings considered of “public-interest”, i.e., admitted to stock

markets in the EU, have the obligation to elaborate corporate governance statements.

This information should include the applicable corporate code of conduct, any code

voluntarily adopted and practices “over and above the requirements of national law”545,

confirming that CSR already has a place under the sun and consists of going beyond

legal obligations. It also covers control and risk management systems and details on the

management and supervisory bodies.

In addition to this, we also find in Directive 2013/34/EU546 a very innovative measure

that obliges the extractive industry (minerals, oil, natural gas, deposits and other

539 Ibíd., p. 98. 540 Ibíd., p. 101. 541 Directive 2013/36/EU, op. cit., recital 52 (p. 343). 542 “The very general provisions on governance of institutions and the non-binding nature of a substantial part of the corporate governance framework, based essentially on voluntary codes of conduct, did not sufficiently facilitate the effective implementation of sound corporate governance practices by institutions. […] The unclear role of the competent authorities in overseeing corporate governance systems in institutions did not allow for sufficient supervision of the effectiveness of the internal governance processes”. Ibíd., recital 53 (pp. 343-344). 543 “Member States should be able to impose corporate governance principles and standards additional to those required by this Directive”, Ibíd., recital 54 (p. 344). 544 We already referred to some disclosure and accounting requirements when we analysed the initial steps of CSR in the EU, before 2009. See supra, heading 3.1, item 1, at pp. 40-41. We now study its reform within more recent Accounting Directives that have strengthened the CSR requirements. 545 Directive 2013/34/EU of the European Parliament and the Council, 26 June 2013, on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, Official Journal of the European Union, 29 June 2013, L 182 pp. 19 ff., article 20 (at pp. 38-39). 546 For national practice and deadlines for transposition, please, refer to the following section.

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materials as well as active in the logging of primary forests) to report on payments to

governments over €100,000 within a financial year, in money or in kind including tax

exemptions, royalties and dividends, licence fees or payments for infrastructure

improvements547. The negotiation of this aspect has been tough and long, for evident

reasons: the Commissions’ proposal was dated October 2011 and the aforementioned

Directive wasn’t adopted until mid-2013, undergoing in this regard some important

modifications. In particular, it should be noted that the legislative proposal made by the

Commission548 was even more restrictive and did not include any payment out of

control (the €100,000 limit).

Here the US’s influence is clear: precisely in January 2010 and with bipartisan support,

the US adopted in a joint session of the Congress and the Senate the Dodd-Frank Wall

Street Reform and Consumer Protection Act, to enhance transparency and financial

stability. Under its section 1504, an addendum (letter Q) is made to Section 13 of the

Securities Exchange Act (1934), to oblige the extractive industry to report on payments

to governments, in very comparable terms to those used –later– in the EU. The US Act

commissioned the SEC to detail in a further regulation the quantities, types of payments

or projects and other operative provisions549. In August 2012 the SEC issued the final

rule limiting it to payments over $100,000 (aggregate or individually), exactly the same

symbolic amount established in Directive 2013/34/EU in June 2013. However,

following to a suit filed by a coalition of industry groups (leaded by Exxon Mobil,

Chevron, Royal Dutch Shell and BP), the SEC rule was annulled in July 2013 by the US

District Court in Washington DC and will have to be reviewed. In September 2014,

after the 270 days deadline, Oxfam America filed a new suit to put pressure on the SEC

to approve a final ruling, which is not likely to be ready before spring 2016.

547 Ibíd., Chapter 10, articles 41-46 (at pp. 52-53). 548 COM (2011) 684 Final, of 25 October 2011, Proposal for a Directive of the European Parliament and the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, pp. 61-62. 549 “Not later than 270 days after the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Commission shall issue final rules that require each resource extraction issuer to include in an annual report of the resource extraction issuer information relating to any payment made by the resource extraction issuer, a subsidiary of the resource extraction issuer, or an entity under the control of the resource extraction issuer to a foreign government or the Federal Government for the purpose of commercial development of oil, natural gas or minerals, including: i) the type and total amount of such payments made for each project of the resource extraction issuer relating to the commercial development of oil, natural gas or minerals; and ii) the type and total amount of such payments made to each government”. CONGRESS OF THE USA (111th): Dodd-Frank Wall Street Reform and Consumer Protection Act, 5 January 2010, Section 1504, H.R. 4173 pp. 845-847, at pp. 845-846, article Q, 2 (A). Emphasis added.

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In any case, the European Directive was passed in the meanwhile (2013), with a clear

American influence, despite the current problems and delays to be finally implemented

in the US. The Directive’s level of transposition into national law by Member States is

very low despite the relative margin of appreciation, and the scarce national

implementing measures generally do not include this requirement for the extractive

industry550. In spite of all, it constitutes a benchmark as it openly recognises the

importance of non-financial information from a social and environmental approach551,

particularly addressed at the extractive industry, which is frequently the target of human

rights defenders.

Directive 2013/34/EU, in turn, has been significantly amended by Directive

2014/95/EU in order to further reinforce CSR requirements, extending non-financial

reporting to large companies (more than 500 employees), whether they operate or not in

the stock markets. Directive 2014/95/EU also changes the content of corporate

governance reports and stipulates that they will comprise “as a minimum,

environmental, social and employee matters, respect for human rights, anti-corruption

and bribery matters”552. This amendment maintains the provision on reports of

payments to governments by the extractive industry, but constitutes a crucial

improvement of Directive 2013/34/EU. It recognises, in a legally binding text, the

centrality of human rights in CSR. Guidelines on non-financial reporting are expected

by December 2016, the same deadline for transposition, so that the first reports shall be

issued for the financial year 2017.

Through this initial legal work, the EU further assumes the “multidimensional nature of

corporate social responsibility”553, indirectly recognising the usefulness of social

550 At the moment of closing this research, only five Member States have partially implemented the Directive. See National Implementing Measures of the Directive at: http://eur-lex.europa.eu/legal-content/EN/NIM/?uri=celex:32013L0034 551 “The information should not be restricted to the financial aspects of the undertaking’s business, and there should be an analysis of environmental and social aspects of the business necessary for an understanding of the undertaking’s development, performance or position”, Directive 2013/34/EU, op. cit., at recital 26 (p. 22 of the OJEU). 552 Emphasis added. This remains applicable, now with the amendment including inter alia human rights, for undertakings trading in the stock markets, correcting so Directive 2013/34/EU with two new articles, 19 a) and 29 a): Directive 2014/95/EU of the European Parliament and of the Council, 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, Official Journal of the European Union, 15 November 2014, L 330 pp. 1 ff., at article 1, pp. 4-6. 553 Ibíd., recital 3 (at p. 1 of the OJEU).

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coercion implied by soft law approaches554, which has begun with disclosure

requirements. Indeed, “non-financial transparency is therefore a key element of any

CSR policy”555; the EU works on transparency issues since the last decade but,

combined with CSR within the framework of corporate governance, it can improve both

the internal market and respect for human rights556.

Perhaps less ambitious at first sight than the above-cited Directives, the protection of

retail investors has received particular attention in terms of transparency and social

responsibility, what is by the way very important taking into account the large number

of individuals and families who had purchased toxic assets before the financial crisis,

including complex financial products that embedded derivatives, without due

information. In this respect, a recent Regulation557 has laid down new simplified

disclosure obligations and standardised leaflets to duly inform eventual retail investors;

from now on, they can apply for compensation if they succeed to demonstrate that

losses result from the reliance on that “key information document”. In view of the

complexity of many financial products from the perspective of retail investors, the

Commission had proposed the reversal of the burden of the proof558. But the Council

finally rejected it and further stated that the manufacturers of such products “shall not

incur civil liability solely on the bases of the key information document” (article 11 of

the Regulation), unless the documents are clearly misleading or inaccurate. To some

extent, the reversal of the burden of the proof has become a fashionable legal tool, also

in human rights law, but its abuse isn’t either advisable and does not necessarily bring

the solutions to the problems. In this sense, we think that this Regulation is a new

element towards integrating CSR in corporate governance, in the belief that

“ [i] ncreasingly, retail investors pursue, along with the financial returns on their

554 “This would inform the market of corporate governance practices and thus put indirect pressures on undertakings”, Ibíd., recital 18 (at p. 3). The Commission by the way continues to encourage Member States to go further: “This should not prevent Member States from requiring disclosure of non-financial information from undertakings and groups other than undertakings which are subject to this Directive” (recital 14). 555 COM (2013) 207 Final, 16 March 2013, Proposal for a Directive of the European Parliament of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups, p.2. 556 M. SONMEZ: “The Role of Transparency in Corporate Governance and Its Regulation in the EU”, in European Company Law, Vol. 10 No. 4/5 (2013), pp. 139-146, at pp. 144-145. 557 Regulation (EU) No. 1286/2014 of the European Parliament and of the Council, 26 November 2014, on key information documents for packaged retail and insurance-based investment products (PRIIPs), Official Journal of the European Union, L 352, pp. 1 ff., at article 11 (p. 14). 558 COM(2012) 352 Final, 3rd July 2012, Proposal for a Regulation of the European Parliament and of the Council on key information documents for investment products, article 11, pp. 24-25.

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investment, additional purposes such as social or environmental goals”559. Accepting

that there are no “one-size fits all” solutions, the CSR legal spill-overs are taking the

form of “comply or explain mandates” to start enhancing disclosure of non-financial

information, also in the area of energy and pollution560.

Notwithstanding these improvements in the area of corporate governance, when the

Commission has tried to move forward with more precise actions beyond disclosure

requirements, it has encountered some barriers. This is what happens to the project to

regulate “supply chain due diligence self-certification of responsible importers of tin,

tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk

areas”. In 2010 the EP asked the Commission to imitate (again) the US –the above-cited

Dodd-Frank Wall Street Reform and Consumer Protection Act (in this case, Section

1502)561, built upon the OECD Due Diligence Guidance for Responsible Supply Chains

of Minerals from Conflict-Affected and High-Risk Areas. The Commission’s proposal

consists of a hard norm, which would serve as a framework for self-regulation

(certifications and good practices) to foster responsible supply chains in this highly

sensitive trade of minerals. The public competent authorities would help to implement

self-certifications and provide with the structures for review, reporting and claiming,

being thus a more daring initiative. The Commission advocates for a mixed hard and

soft approach, in which companies partly manage a self-certificate as “responsible

importers” but, once in, they must fully comply with the OECD guidelines and accept

supervision and reporting. Another option would be to make it compulsory to join the

system, so that the number of Companies would be higher, but the requirements would

eventually persuade them to leave certain risk areas looking for an alternative sourcing,

to make it easier to comply with the standards. This would probably generate serious

market distortions when abandoning already weak countries, in which companies would

not source anymore. What is more, by leaving these conflict-affected or high-risk areas,

at the end, nothing would point to improvements on the ground. Since 2010, after the

approval of Dodd-Frank Act, it has been assessed a drastic reduction of exports and

increase of informal trade networks in DRC and neighbouring countries of the Great 559 Regulation (EU) No. 1286/2014, op. cit., recital 19 (at p. 4 of the OJEU). 560 M. A. CAMILLERI: “Environmental, social and governance disclosures in Europe”, op. cit., at pp. 238-239. 561 COM(2014) 111 Final, 5 March 2014, Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-regulation of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high risk areas, recital 7, p. 3.

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Lakes Region where, again, we face the problem of failed States (DRC). This negative

impact562, according to the Commission, could be minimised if the Regulation

maintains the half-voluntary character of this self-certification system, so as to avoid

worsening the problems at source by simply abandoning these areas.

The fact is that the EP called on the Commission to regulate this matter in 2010, again

inspired by the USA’s Dodd-Frank Act (here Section 1502), but the proposal was not

drafted and published until 2014. The outcome is still unclear. Politically speaking, the

Commission united to the High Representative of the European Union for Foreign

Affairs and Security Policy to put pressure on the Council and the Parliament, stressing

the development and human rights coherence of adopting such a regulation, in the

exposed terms, consistently with the values that should inform EU’s external action563.

For instance, the Parliament’s reaction has been a profusion of amendments adopted on

20 May 2015, even asking for a tougher regulation and accentuating the human rights

aspects564. Although the negotiations seem to be delayed sine die, sooner or later it will

certainly impact EU Law, probably in a positive manner if it succeeds in balancing, to

the extent possible, the necessary requirement of responsible imports with the

development needs of those areas.

Finally, a complementary way to promote CSR through legally-binding instruments is

the recent and innovative public procurement reform, which facilitates at the same time

market reward to socially responsible companies. The EU has enforced new provisions

that establish, as a general rule, that Member States’ public contracts shall comply with

the “applicable obligations in the fields of environmental, social and labour law

established by Union law, national law, and collective agreements or by the

international environmental, social and labour law provisions listed in Annex X”565. For

562 The Commission’s policy assessment can be found at the Staff Working Document: SWD(2014) 52 Final, Executive Summary of the Impact Assessment Accompanying the document “Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas”. 563 JOIN(2014) 8 Final, 5 March 2014, Joint Communication to the European Parliament and the Council. Responsible sourcing of minerals originating in conflict-affected and high-risk areas. Towards an integrated EU approach, 13 pp. 564 EUROPEAN PARLIAMENT: Amendments adopted on the proposal for a regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importer of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas, 20 May 2015, P8_TA-PROV(2015)0204. 565 Directive 2014/24/EU of the European Parliament and of the Council, 26 February 2014, on public procurement and repealing Directive 2004/18/EC, Official Journal of the European Union, 28 March

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that purpose, labels can be used to evaluate candidates so that more economically

advantageous tenderers might be rejected for those reasons 566.

We find equivalent measures in Directive 2014/25/EU, specifically addressing public

procurement in the water, energy, transport and postal services sectors567: article 36.2

lays down the same labour, social and environmental principles, also evaluable through

the appropriate labels (art. 61) and provides with a list of international agreements in

Annex XIV. However, Annex X of Directive 2014/24/EU and Annex XIV of Directive

2014/25 /EU completely forget two basic international human rights instruments:

neither the International Covenant on Civil and Political Rights nor the International

Covenant on Economic, Social and Cultural Rights are apparently part of the EU

“environmental, social and labour” standards dealing with public procurement,

according to these Annexes, despite correctly citing many ILO and other environmental

conventions. The Commission could easily correct it, for example, adding the above-

mentioned Conventions to Annex XIV of Directive 2014/25/EU, as a delegated act

expressly foreseen by art. 76.8 of this Directive, given that all Member States have

ratified both the ICCPR and the ICESCR568. In sum, despite improvable details, the

public procurement reform has introduced new CSR criteria to award public contracts.

To recapitulate, CSR has firstly been introduced in corporate governance, initiating an

unprecedented role in legally binding texts. Its incipient impact on the financial sector

led to the control of credit and investment institutions, including risk-linked

remuneration policies within management boards and gender balance (Directive

2013/36/EU). This was followed up with the protection of retail investors against

misleading and aggressive practices, including new social and environmental

considerations (Regulation (EU) No. 1286/2014). CSR has been extended also to non-

2014, L 94, pp. 65 ff., art. 18.2 (at p. 106). Similar provisions but in more general terms are found at Directive 2014/23/EU. 566 Directive 2014/24/EU, articles 56.1 and 57.4 a) read together with art. 18.2. Ibíd., at p. 122 of the OJEU. However, it must be noted that, according to art. 9, these rules apply only internally so that contracts pursuant international rules are excluded, a loop-hole in the EU’s consistency ad extra. 567 Directive 2014/25/EU of the European Parliament and of the Council, 26 February 2014, on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, Official Journal of the European Union, 28 March 2014, L 94, p. 243 ff. 568 All 28 Member States have ratified the ICCPR and the ICESCR of 1966 (to check the status of signatures and ratifications see https://treaties.un.org/). However, it must be highlighted that, as for their respective Optional Protocols –allowing individual complaints and the competences of the UN Committees on CPR or ESCR– all Member States except the UK have ratified the Optional Protocol of the ICCPR and only seven Member States have ratified the OP to the ICESCR (Spain, Slovakia, Portugal, Luxembourg, France, Belgium and Italy). The Netherlands have signed the OP to the ICESCR but has not ratified the text yet.

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financial disclosure requirements from a human rights approach (Directive 2013/34/EU

and its partial amendment in Dir. 2014/95/EU), what applies to large companies in

general terms (a potential of ca. 6000 EU Companies). Also Directive 2013/34/EU sets

innovative reporting obligations for the extractive industry on payments to governments

above €100000, what is likely to become an utterly interesting instrument to increase

control on this industry as well as in the fight against corruption in developing

countries. As can be seen, CSR has firstly penetrated the European Corporate

Governance Regulation, which has become an “extremely versatile, comparative and

transnational legal field”; in the overall, we detect positive aspects to the extent “both

hard and soft norms governing particular elements of corporate governance, accentuates

the degree to which European Corporate Governance Regulation has come under

pressure to facilitate quasi-neutral, ‘best’ practices in ‘good’ corporate governance”569.

In the end, we have seen that a comprehensive public procurement reform has added

new CSR contracting requirements to be further regulated by Member States (Directives

2014/24/EU and 2014/25/EU). Then, the pending regulation on responsible supply

chains of minerals appears a promising initiative, once more combining hard and soft

norms, while the Commission seems to bear in mind the need to address human rights

problems at source. We therefore note that the implementation of the CSR agenda has

incipient legal spill-overs, which are far from negligible; it does not seem unreasonable

to predict that this tendency will continue.

3.3. National initiatives in the EU

3.3.1. Member States’ role: challenges and opportunities

The importance of Member States in ensuring the implementation of any EU policy or

piece of legislation is beyond any doubt and the diverse levels of compliance have for

long received the attention of the literature. It is too soon to make any study on the

transposition of the CSR-aspects of the Directives analysed above; once possible, i.e.,

after the expiration of the deadlines for transposition or even slightly later, such a

research might be of interest to confront it to the state of the art. For instance, the

569 P. ZUMBANSEN: “New Governance in European Corporate Law Regulation as Transnational Legal Pluralism”, in European Law Journal, Vol. 15 No. 2 (March 2009), pp. 246-276, at pp. 247 and 251 (citations).

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deadline for transposition of Directive 2013/34/EU expired 20 July 2015 and no

Member State has yet transposed into national law the aspects related to the disclosure

of payments to governments by the extractive industry (arts. 41-46 of the Directive,

which were not modified by Dir. 2014/95/EU so that the transposition deadline was not

postponed in this regard). The transposition deadline for Directive 2014/95/EU,

strengthening the CSR reporting requirements for large companies, expires 6 December

2016. It happens the same with the public procurement reform (2014/24/EU and

2014/25/EU, deadline 18 April 2016) so that they might be applied for the financial year

2017, even though States like France, the Netherlands or Finland include similar

provisions in their public procurements well before the appearance of these Directives,

as we will illustrate below. Again, it is too soon to draw any conclusion on national

implementing measures. Likewise, it would be premature to fully evaluate to what

extent the EU succeeds in effectively mobilising Member States; only some preliminary

comments might be done with the limited value of an early assessment.

The limits of Member States’ discretion is a more than usual EU Law issue: if

Directives impose obligations of results without predetermining the means, one can

imagine to what extent soft law and CSR leave an ample room for manoeuvre.

Harmonisation seems easier with soft law under the OMC (despite its imperfections, as

discussed elsewhere in this work570) and it can be sometimes even more suitable, for

example, to leave space for experimentation when national business systems and other

national constraints widely differ. At the national level, the UN Guiding Principle 3-b)

invites States to “provide effective guidance to business enterprises on how to respect

human rights throughout their operations”, at the same time they ensure the human

rights-consistency of their legislation (UNGP 3-a)). This is the basis of Member States’

role.

The EU has taken over the responsibility to promote compliance with the UNGPs

among Member States. The famous Renewed EU Strategy 2011-2014 for CSR already

asked Member States “to develop or update by mid-2012 their own plans or national

lists of priority actions to promote CSR” 571, within the broader context of several peer

reviews to exchange information and experiences. The Commission has undertaken

seven of such peer reviews in 2013 to study the best policy options at a national level.

570 See below Chapter IV, section 1. 571 COM (2011) 681 Final, op. cit., para. 4.7, pp. 12-13.

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In June 2012, the Action Plan on Human Rights and Democracy for 2012-2014, issued

at the same time of the EU Strategic Framework on the same subject, foresees to

“develop National Action Plans for EU Member States on implementation of the

UNGPs”, ideally by 2013572. The Action Plan on Human Rights and Democracy has

been updated for the period 2015-2019 but the need to “develop and implement

National Action Plans (NAPs) on the implementation of the UN Guiding Principles” 573

is repeated. The current Action Plan then reiterates the necessary commitment at the

national level and extends the deadline to 2017.

Indeed, at the time of writing, only five Member States have developed such NAPs on

“business and human rights”, thus implementing the UNGPs: Finland, the United

Kingdom, The Netherlands, Denmark and Italy (a preliminary version considered

valid). The COHOM is supposed to stimulate their adoption and monitor the state of

implementation, apparently without much success in view of the modest number of

NAPs on business and human rights.

Nevertheless, up to eighteen Member States have specific NAPs on CSR (nineteen if we

add the United Kingdom, with a longer tradition in this regard). Perhaps CSR has

become a more attractive denomination (19 NAPs) compared to the “business and

human rights” label (5 NAPs), despite their obvious closeness and the insistence of the

EU to endorse the UN approach. Member States might be reluctant to intensify the

human rights language within CSR, forgetting that the most effective way to approach

the latter is through the UNGPs.

Concerning NAPs on CSR, there are also a number of ways to adopt them: according to

the latest available information574, only Cyprus and Bulgaria detailed the approval by

the Council of Ministers, which seems the most authoritative option given the complex

interaction between legal force and political power in our topic575. But the most usual

572 COUNCIL OF THE EU: EU Strategic Framework and Action Plan on Human Rights and Democracy, Luxembourg, 25 June 2012, Council Doc. 11855/12, Annex, Action 25 c), p. 20. 573 EUROPEAN COMMISSION and HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS AND SECURITY POLICY: Joint Communication to the European Parliament and to the Council. Action Plan on Human Rights and Democracy (2015-2019). “Keeping Human Rights at the heart of the EU Agenda”. Brussels, 28 April 2015, JOIN (2015) 16 Final, Action 17 b), p. 14. 574 EUROPEAN COMMISSION: Corporate Social Responsibility. National Public Policies in the European Union (Compendium 2014), Brussels, June 2014, pp.14-15 and Annex (pp. 60-100). 575 Information provided to this author by participants in the Spanish working group indicates that the Spanish NAP, under development, would also be submitted for deliberation and approval by the Council of Ministers.

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procedure consists of more or less informal governmental publications (a memorandum

in Latvia, preparatory documents in France, non-binding policy papers issued by

commissions or committees such as the Danish Council for CSR or the

Interdepartmental Commission on Sustainable Development in Belgium –governmental

bodies without real legislative powers). Screening all EU Member States, we further

note that the Czech Republic has decided to add the UNGP’s within the already done

CSR plan, and Malta is considering the same possibility for their NAP on CSR under

development. That raises the question as to what extent two separate action plans are

really necessary (one on CSR and a second one on business and human rights).

For the time being, NAPs on CSR rarely lead to legislative actions; on the contrary,

most of the time policies propose awareness raising and promotional activities, the

softest options. To cite only a few examples: the usual eco-labels in Nordic countries;

the Dutch online-tool to provide Companies with country assessments of human rights’

risks in third countries; a Polish CSR capacity-building program for SMEs; the Austrian

toolkit for gender equality; the Estonian CSR label; the Irish “Business Working

Responsibility Mark” to certify responsible and sustainable businesses; a CSR

dictionary in Croatia; the Danish Partnership for Public Green Procurement; the Finish

website “CSR Compass” to guide on CSR within public procurement; etc.

Harder or softer, consolidated or recent, the fact is that 19 Member States have NAPs on

CSR while only five on the UNGP’s. As stated, this is of course an additional aspect to

complete a wider picture of the national initiatives in the EU. There are other

differences among Member States caused by simpler factors: political tradition, the

maturity of the civil society and quality of democracy, plus the diverse understandings

of market coordinated economies. In this sense, the enlargement eastwards has

incorporated countries with a less enthusiastic attitude towards any eventual hardening

of CSR, since the attraction of FDIs constitutes there a priority and there is some

historical fear to reintroduce politics in the economy.

Economically speaking, the key factors that explain national differences in the EU are

the greater or lesser exposure to international trade and supply chains, the importance of

exports and the balance of payments, the relative weight of SMEs in the GDP, the major

sectors of the economy, the number of MNC’s headquarters, and the macro- and micro-

economic situation in the overall.

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As for the economic situation, many European NAPs on CSR include measures that

actually respond to the crisis since 2007/2008, to tackle structural unemployment,

youngsters and elderly people, and other internal problems (mainly in social affairs).

Suffice the example of the Spanish label to acknowledge companies that take part in the

“Strategy for Entrepreneurship and Youth Employment”. The crisis has generated a

series of human rights challenges in some EU Member States: of course, one of the

objectives of CSR is to enhance preventive measures to promote human rights’

horizontal effects, while actively involving private actors, with two dimensions, external

and internal. But an excessive focus on the internal aspects may distort the sense of

CSR. The obligation to respect core human rights treaties already existed for EU

Member States, so that the predominance of internal social affairs is somehow

unfocused, despite being a perfectly understandable priority. In this regard, it is basic to

keep a distance and remain critical: we do not think that the contingent character of this

crisis-motivated and internally-oriented approach to CSR is likely to bring about

durable and positive changes, neither for society nor for companies themselves.

In sum, national initiatives need to be contextualised within a broader analytical

framework. On the ground, 39.83% of companies included in the Dow Jones

Sustainability Index are located in EU Member States. We can list the EU countries in

order: United Kingdom (second position; 12.57% of companies incorporated to the

DJSI are British), Germany (4th position; 8.14%), France (5th; 6.75%), Spain (8th;

3’65%), Netherlands (10th; 3.10%), Italy (12th; 2.79%), Denmark (13th; 1.42%), Sweden

(15th; 1.02%), Finland (20th; 0.20%), Portugal (23rd; 0.15%) and Belgium (25th;

0.04%)576. It must be noted that Netherlands, Finland, Denmark, the United Kingdom

and Italy, all having both NAPs (on CSR and on the UNGPs) do not necessarily have a

higher number of companies within the DJSI compared to countries that only have

NAPs on CSR (Sweden, France, Germany and Belgium), or compared to those with

none of the two NAPs yet (Spain and Portugal, under development though). Moreover,

these results need to be interpreted in the light of offshoring processes by which the

dirtiest industries or production phases have been moved from advanced economies to

576 Dow Jones Sustainability World Index. Data calculated in USD as of end of July 2015. Available at http://djindexes.com/sustainability/?go=literature.

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other parts of the world577, improving OECD countries’ performance in environmental

and social matters.

This reminds us the OECD Guidelines for Multinational Enterprises: twenty-four EU

Member States have adhered578, obliging themselves to establish National Contact

Points with three main functions: CSR promotion, enquiries and research tasks, and the

establishment of non-judicial dispute mediation mechanisms in some cases of alleged

non-compliance with the Guidelines. Luxembourg or Austria have no NAPs yet, but

they have adhered to the OECD Guidelines, and both established in 2000 their

respective National Contact Points within the Ministry of Economy.

In view of all that has been set out above, the presence of NAPs on CSR or specifically

on business and human rights, or both of them, is not necessarily correlated to a better

CSR performance. It will only be a sign, an indicative element that needs to be assessed

through political, legal and economic filters.

Denmark and France are good examples to complete this picture and reveal some grey

zones: the Commission has not always been the torchbearer. Denmark has published its

NAP on CSR in 2008 and on the UNGPs in 2014, but as early as 2008 an amendment to

the Danish law on Financial Statements added new CSR requirements well-above the

Directive applicable at that time and even more stringent than the current ones, with

effects on companies above 250 employees (while the EU stated 500 employees). This

constitutes an innovative and visionary introduction of CSR in Danish Company Law,

with a clear human rights language; while specific CSR actions are up to the companies,

the obligation is clear on the reporting side, marking a “gradual jurification of societal

expectations of companies”579, extrapolating international standards and leading the way

in the EU.

577 “[A] dvanced economies have often moved their more dirty industries to other parts of the world where there are less stringent environmental and social standards. As a result, other countries may be polluting on their behalf and the indexes do not factor those in”. R. MULLERAT: “Corporate Social Responsibility: A European Perspective”, in Jean Monnet/Robert Schuman Paper Series (University of Miami), Vol. 13 No. 6 (June 2013), 22 pp. at p. 4. 578 45 States in total have adhered, so EU countries represent more than a half of the global support of the OECD Guidelines. EU Member States that adhered to the Guidelines are: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. As usual, a different problem is the extent to which the general public has this information. See https://mneguidelines.oecd.org/ncps/ 579 K. BUHMAN: “The Danish CSR Reporting Requirement: Migration of CSR-Related International Norms into Companies’ Self Regulation through Company Law?”, in European Company Law, Vol. 8

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France has been far in front of other countries in continental Europe too: well-before the

publication of the preparatory document for the French NAP on CSR (January 2013),

and well in advance of Directives 2013/34/EU and 2014/95/EU, the French Grenelle

Law of 2001, reformed in 2010 precisely to reinforce its CSR aspects, already

established quite stringent non-financial disclosure requirements for companies. That is,

three years before any EU directive was contemplated. The so-called Grenelle II Law

(2010) did not just affect corporations operating in the stock markets, but also large

companies in general terms as well as investment companies580. Investment funds and

asset management companies have, since 2010, to prepare annual reports on the criteria

concerning «le respect d’objectifs sociaux, environnementaux et de qualité de

gouvernance». Furthermore, article 225 of the Grenelle II Law importantly clarifies

their content: «Il comprend également des informations sur la manière dont la société

prend en compte les conséquences sociales et environnementales de son activité ainsi

que sur ses engagements sociétaux en faveur du développement durable […] sur la

société elle-même ainsi que sur l’ensemble de ses filiales […] ou les sociétés qu’elle

contrôle […]»581. This French Law has another cutting-edge aspect: the creation of an

independent monitoring body, tasked to verify the soundness of corporate reports and,

as of the year 2016, empowered to issue an opinion («un avis motivé») on the sincerity

of the content («la sincérité des informations»)582 –a bit ingenuous in Foucauldian

terms583.

No. 2/3 (2011), pp. 65-73, p. 73. Only unofficial English translations are available of the cited Danish law; the reference of the law is “Act No. 1403 (27 December 2008) amending the Act on Financial Statements (Lov om aendring af arsregnskabsloven)”. 580 There is an abundant French literature on the issue. A short but good in English: V. MAGNIER: “New Trends in French Corporate Governance: Towards a Stakeholder oriented Approach?” in European Company Law, Vol. 9 No. 5 (2012), pp. 245-249, passim. 581 Law No. 2010-788 of 12 July 2010 (“portant engagement national pour l’environnement”), Journal Officiel de la République Française, No. 0160 du 13 Juillet 2010, page 12905, art. 224 and 225. 582 One year and a half after the adoption of Grenelle II Law, the Conseil d’Etat issued the application Decree No. 2012-557 of 24 April 2012 to finally regulate some operative aspects, establishing a progressive entry into force, in such a way that the first year (2011) only companies in the stock markets and those with more than 5000 employees would be affected, extending it in 2012 to companies with more than 2000 employees and finally, in 2013, to any company with more than 500 employees (or equivalent revenue criteria according to the French legislation). The application decree also regulates the independent monitoring body to which we refer in the text above. Décret nº 2012-557 du 24 avril 212 relatif aux obligations de transparence des entreprises en matière sociale et environnementale, Journal Officiel de la République Française No. 0099 du 26 avril 2012, page 7439, art. 1. French legislation is available at : www.legifrance.gouv.fr 583 « Il n’y a pas d’exercice du pouvoir sans une certaine économie des discours de vérité fonctionnant dans, à partir de et à travers ce pouvoir. Nous sommes soumis par le pouvoir à la production de la vérité et nous ne pouvons exercer le pouvoir que par la production de la vérité. C’est vrai de toute société, mais je crois que dans la nôtre ce rapport entre pouvoir, droit et vérité s’organise d’une façon très

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Naturally, the Commission’s compendium on national public policies recognises the

uniqueness of the early French initiatives in this regard584. Interestingly enough, it must

be recalled that the Commission did not always praise France for this pioneering social

and environmental progresses: at the request of tenderers in 1998, the Commission

brought an action before the ECJ to declare the French failure to fulfil its obligations

under Community Law because it had included social clauses (a campaign against

unemployment) among the criteria to award public works contracts585. The Directives

governing public procurement at the moment were almost exclusively centred on

economic criteria, and the Commission initially played an unclear role in the potential

extension to social and environmental issues. The ECJ followed a quite progressive

interpretation to support some EU Member States that were already including social and

environmental clauses in public contracts; not only in the above-cited case of the

Commission vs. France, but also in three important preliminary rulings regarding the

Netherlands586, Finland587 and Austria588. We have come a long way since that action

against France; now the Commission actively supports further explicit CSR clauses in

particulière… ». M. FOUCAULT : « Il faut défendre la société ». Cours au Collège de France (1975-1976), Paris 1997, Éd. Gallimard Le Seuil, pp. 22. 584 “France has implemented a unique worldwide legislative requirement [...]”, EUROPEAN COMMISSION: Corporate Social Responsibility. National Public Policies in the European Union (Compendium 2014), Brussels, June 2014, pp. 49 and 39. 585 The Court concluded that the Directive then in force “does not preclude all possibility for the contracting authorities to use as a criterion a condition linked to the campaign against unemployment provided that that condition is consistent with all the fundamental principles of Community Law, in particular the principle of non-discrimination flowing from the provisions of the Treaty on the right of establishment and the freedom to provide services”, Case C-225/98, Commission v. France, Judgement of 26 September 2000, para. 50. 586 “The condition relating to the employment of long-term unemployed persons is compatible with the Directive if it has no direct or indirect discriminatory effect on tenderers from other Member States of the Community. An additional specific condition of this kind must be mentioned in the contract notice”, Case 31/87, Gebroeders Beentjes BV, Judgement of 20 September 1988, para. 37 iii) . 587 In this case, on the environmental requirements for a city-bus service contract in Helsinki, the ECJ decided to recur to the Treaties stating, more innovatively, that environmental concerns had to underpin all EU Policies (of course, it is a judgement of 2002): “Article 130r(2) of the EC Treaty, transferred by the Treaty of Amsterdam in slightly amended form to Article 6 EC, which lays down that environmental protection requirements must be integrated into the definition and implementation of Community Policies and activities, it must be concluded that Article 36(1)a of Directive 92/50 does not exclude the possibility for the contracting authority of using criteria relating to the preservation of the environment when assessing the economically most advantageous tender”. Case 513/99, Concordia Bus Finland, Judgement of 17 September 2002, para. 57. 588 In this case, a public contract to supply electricity that included a number of requirements on renewable energy sources. “The Court therefore accepted that where the contracting authority decides to award a contract to the tenderer who submits the most economically advantageous tender it may take into consideration ecological criteria, provided that they are linked to the subject-matter of the contract, do not confer an unrestricted freedom of choice on the authority, are expressly mentioned in the contract documents or the tender notice, and comply with all the fundamental principles of Community Law, in particular the principle of non-discrimination”. Case C-448/01, EVN AG, Wienstrom GmbH, Judgement of 4 December 2003, para 33.

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public procurement589 but it should be born in mind the role of some EU Member States

that took a step forward and how the ECJ found the legal way to support it.

As is apparent, the promotion of CSR at a national level in the EU has several facets;

NAPs are insufficient to evaluate the real role of EU Member States. In some cases,

Member States have been more advanced than the Commission. NAPs (on CSR or, at

best, on business and human rights) are only another element, to be added to the

endorsement of the OECD Guidelines, the prompt and complete implementation of the

CSR-aspects of recent EU Directives, other purely legislative measures, even the daily

administration, to mention just a few. Many studies excessively focus on NAPs: we

must see the wood, not just the trees.

Leaving aside concrete examples of what is happening at the national level, it is now

relevant to make some theoretical comments. To explain the diversity of national

responses to the CSR agenda, from our institutional perspective that studies both

political and legal factors, we need to take into account the national business systems

and different varieties of capitalism. The concept of “implicit” and “explicit” CSR, first

proposed by Matten and Moon in 2008, deems to be very useful to shed light on the

current European initiatives and explain the spread of NAPs on CSR among EU

Member States, as well as a previous “hidden CSR” at a national level. To some extent,

it could be guessed when we explained the more or less remote origin of CSR in the

EU, even before being labelled as such. The concepts of implicit and explicit CSR are

worth a longer citation:590

“[C]orporations practicing implicit CSR might conduct practices similar to those of corporations practicing explicit CSR. Implicit CSR, however, is not conceived of as a voluntary and deliberate corporate decision but, rather, as a reaction to, or reflection of, a corporation’s institutional environment, whereas explicit CSR is the result of a deliberate, voluntary, and often strategic decision of a corporation. Many of the elements of implicit CSR occur in the form of codified norms, rules and laws but are not conventionally described explicitly as CSR. It is the societal norms, networks, organizations, and rules that are explicit, rather than their implications for the social responsibilities of business. It is in this sense that CSR in these systems is implicit. Where corporations comply with the law and customary ethics but do not claim distinctive authorship of these practices, they are nonetheless acting responsibly […]”.

589 See this chapter, Section 2.3 for the analysis of the current public procurement directives and the supportive role of the Commission. 590 D. MATTEN and J. MOON: “Implicit” and “Explicit” CSR: A Conceptual Framework for a Comparative Understanding of Corporate Social Responsibility”, in Academy of Management Review, Vol. 33 No. 2 (April 2008), pp. 404-424, at p. 410.

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According to Matten and Moon, some differences between the US and the EU can help

explain the evolution of the several policy options of EU Member States. For instance,

the power of the State is lower in the US and there is a greater corporate discretion in

this matter (CSR), on which the US government has been less active. The enhanced role

of private actors in the US is also visible in more evident differences concerning the

education, labour and cultural systems, added to a lower public confidence in, and

credibility of, the government compared to Europe. In finances, the US has rather

focused on shareholders whereas there have always been wider concerns in the EU,

where public authorities have historically been friendlier to the concept of

‘stakeholders’. This has marked two different paths towards CSR: in Europe, through a

consolidated institutional concern on public participation and stakeholders, and in the

US via a higher exposure to stock markets and dispersed ownership that would have

obliged to put in place earlier transparency measures to attract investors and consumers.

Moreover, in Europe corporations tend to be controlled by a smaller number of large

investors, among which banks and financial institutions predominate, apart from

depending more on the State as an economic actor.

Matten and Moon’s analysis concludes that the US, being a more liberal market

economy, has traditionally been closer to explicit CSR: companies freely choose how to

proceed and explicitly express their own original CSR, in a flexible and voluntary

manner, sensitive to a variety of corporate needs and interests before deciding how to

interact with more general societal expectations regarding business responsibility.

However, in the EU, a less liberal economy, Member States traditionally have an

“implicit CSR” on a number of issues, a CSR before CSR, which in our view continues

to condition Member States initiatives and, sometimes, their scepticism since implicit

CSR schemes look nearer to hard law approaches. In one way or another, explicit or

implicit, it is all about corporate responsibility. The concept can also be extended to the

EU: as we have seen, an implicit CSR has existed in many policies before the explicit

one emerged.

Famous corporate scandals (Parmalat in Italy, Elf Aquitaine in France, Ahold in the

Netherlands, etc.), alongside the increasing privatisation of public goods and services in

the EU, plus the impact of the financial crisis and general globalisation trends, have all

together risen social awareness of private actors and might jointly explain the recent

spread of a more explicit CSR among EU Member States. The public opinion is

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suddenly to many unexpected limits of Nation-States to face these problems: the

European implicit CSR, despite its traditional emphasis on hard regulations, deemed to

be insufficient after these recent developments, thus “encouraging a more explicit

CSR”591. The deficiencies of traditional regulations in the EU have been noted during

the crisis, when we discovered the link between remuneration systems and excessive

financial risks. The historical trend persists to some extent: for example, the general

lack of workers matters in the European CSR is the result of a long historical labour law

tradition that takes for granted an “implicit CSR” on the subject, relying on already

existing norms. In our opinion, this trend might change following to the labour system

reforms undertaken, in the heat of the crisis, by some liberal and conservative

governments in the EU, in order to “flexibilize” –as they claim– the labour market, what

could in the future make necessary a stronger explicit CSR also in this area (if the

former implicit one is really weakened and impossible to be restored). However,

workers matters are at the core of CSR in US companies.

Whatever the case, if the implementation of the CSR agenda has (promising) legal spill-

overs in the EU, it is because of a typically European historical and constitutional

preference for hard law, which is likely to become one of the main European

contributions to global CSR (with the exception of the United Kingdom as a common

law system with a longer and more liberal understanding of CSR).

EU Member States have a crucial role to build a wider consensus, which is needed both

inside and outside the EU to effectively boost CSR. We notice a great number of risks

and problems when we come down to the State level, more accentuated in highly

decentralised countries. In summary, the main problematics we have detected concern

the different speeds and understandings with respect to CSR, which is shaped by

structural political and economic factors. In general terms, Member States simply

follow the EU institutions. Of course, no anti-CSR attitude is detected, but there are no

big enthusiasms or particularly original initiatives either, even in those countries that

show a stronger commitment.

A possible way to face many of the aforementioned challenges is to task the already

existing National Human Rights Institutions with the coordination, on-going evolution 591 According to Matten and Moon, the US reaction has been the opposite: a growth of the implicit CSR with two unexpected legislative initiatives, the Dodd-Frank Act and the Sarbanes-Oxley Act, both cited elsewhere in this research. Ibíd., p. 415.

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and implementation of the CSR agenda. The potential role of NHRIs has been somehow

underestimated or simply forgotten when dealing with business and human rights592.

We can further elaborate on the advantages of NHRIs in this respect. For instance, it is a

public authority, functionally independent from the government (sometimes even

handling individual complaints), with the know-how and experience in the field to adapt

better to the EU national diversity, including legal aspects. Secondly, this would allow a

proper recognition that human rights are an essential ingredient of the definition of

CSR, as the latter would be incorporated into the areas of action of a proper human

rights institution, thus consolidating the human rights language within CSR. By the

way, the creation of new institutions (in the form of committees, interdepartmental

bodies, etc.) is not a very pragmatic solution either, provided that NHRI’s capacity to

act in their former competencies is not weakened by adding this new responsibility.

Thirdly, it can solve the usual mistrust that looms any negotiation to establish

monitoring bodies: despite being public, its functional independence according to the

Paris Principles would never be to the governments’ total satisfaction, since NHRIs

could also control public authorities and state-owned companies, or participated by the

State or providing public services. Of course, in this new capacity, NHRIs would not be

the ideal option for many companies either, as many are still advocating for the

predominance of self-regulation, without realising that the current tendency seems

hardly reversible and tends to combine self-regulation with both co-regulation and, also,

proper regulations –at least to frame the first two ones. A larger degree of regulatory

coordination between Member States is needed to make CSR work, perfectly

compatible with its voluntary nature593.

592 We mean it has been underestimated by governments –not by scientific literature. States, in their NAPs and CSR policies, don’t contemplate any special role for NHRIs in a field, business and human rights, on which these institutions could be very useful. Surya Deva promotes this idea since 2011: S. DEVA: “Corporate Human Rights Abuses: What Role for the National Human Rights Institutions?”, in H. NASU and B. SAUL (Eds.): Human Rights in the Asia Pacific Region: Towards Institution Building, London 2011, Routledge Ed., pp. 234-248. In the same sense, also see: M. BRODIE: “Pushing the Boundaries: The Role of National Human Rights Institutions in Operationalising the ‘Protect, Respect and Remedy’ Framework”, in R. MARES (Ed.): op. cit., pp. 245-272. Also generally: V. HAÁSZ: “The Role of National Human Rights Institutions un the Implementation of the UN Guiding Principles”, in Human Rights Review, Vol. 14 No. 3 (September 2013), pp. 165-187, passim. 593 A sort of ‘voluntary within mandatory’ scheme: “There is a need, clearly identifiable, for a regulatory framework to be established, if CSR is to work. This is not in contradiction with the voluntary character of CSR. On the contrary, it attaches its meaning to voluntary commitments”. O. De SCHUTTER: “Corporate Social Responsibility European Style”, in European Law Journal, Vol. 14 No. 2 (March 2008), pp. 203-236, at p. 219.

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Lobbying activities comprise by the way private self-certification systems –the

proliferation and marketization of certificates is a not very desirable development, but a

real possibility within the consultancy sector. The problem of CSR standardisation and

certification systems at a national level has materialised in the Netherlands following to

the ISO 26000. Since the ISO did not support any kind of certification, the Dutch

private-led “CSR Performance Ladder” identified a market need to adapt and change the

ISO 26000 into a certifiable system, arguing that both customers and businesses need

publicly recognisable standards which imply reputational consequences to facilitate

market rewards for responsible companies594. In our view, private and for-profit CSR

rating agencies remind us –setting aside obvious differences– the recent role of private

rating agencies during the debt markets crisis. In relation to this, NHRI’s new

competencies on Business and Human Rights could include the management (definition

and award) of CSR labels and certificates, on a non-profit basis to avoid their

privatisation and multiplication (likely to generate confusion), thus contributing to their

credibility. However, to finish with standards and certification systems, we wonder if it

would be preferable to have European labels rather than national ones, such as the EU

eco-Flower, managed by the Commission, as they would be more attractive than

national labels for different reasons: mainly, the dimensions of the common market and

the capacity of the EU to create widely recognised and credible logos that would

increase their reliability.

At the national level, NHRIs can, in sum, actively contribute to the implementation and

supervision of the international framework, within which a high degree of voluntary

actions would be maintained. NHRI’s have the potential to address many of the

practical challenges in Member States to overcome the predominance of information

and promotion strategies, pushing for more concrete developments. Therefore, the role

of Member States is essential. With a few exceptions, it can be said that EU States tend

to work reactively rather than proactively –most of the power of initiative still stays

with the EU (particularly, the Commission). In some aspects such as public

procurement Member States, however, were initially more audacious than the

Commission. The current spread of NAPs on CSR, in five cases specifically on the

UNGPs, only constitute the first step towards building a stronger international

594 L. MORATIS and A. TATANG WIDJAJA: “Determinants of CSR standards adoption: exploring the case of ISO 26000 and the CSR performance ladder in the Netherlands”, in Social Responsibility Journal, Vol. 10 No. 3 (2014), pp. 516-536, at pp. 518-519 and 525-526.

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consensus, development for which Member States deem to be of an utmost importance,

even over the EU institutional role. Finally, Member States can build on their previous

experience, their implicit CSR, to intensify without fear the human rights language in

CSR as well as caring of its external/international dimension in relation to development

policies (as it now happens at the EU level). The implementation of the CSR agenda is

therefore conditioned by a number of problematic factors that influence the outputs at a

national level, even though there are identifiable opportunity niches.

3.3.2. National guidelines and main initiatives595

NAPs on business and human rights are being elaborated at a very lower speed than

NAPs on CSR, but they seem a more comprehensive option or, at least, a better decision

since it emphasises the centrality of human rights in this topic. For the time being, only

the United Kingdom, the Netherlands, Denmark, Finland and Italy have published their

NAPs on business and human rights. Acknowledged the fact that Member States’ CSR

performance depends on many other factors, and that the need of two separate NAPs is

discussable in view of the debate above, the fact of being the first five countries with

NAPs on the UNGPs can be a pretext for studying more in detail their policies.

This five NAPs strictly follow the three-level structure of John Ruggies’ Framework

(protect, respect and remedy). The contents, however, are more OECD-informed while

the WTO and ILO have a very limited presence. They can be defined as policy papers,

the result of ministerial working groups. The main institutions involved at a national

level are:

- In Finland, the strategy is governed by the Ministry of Employment and the

Economy. Within this Ministry, the Committee on Corporate Social

Responsibility is an independent advisory body composed of government

authorities and CSOs’ representatives; its tasks comprise the evaluation and

development of CSR policies. The same Committee functions as the Finnish

NCP of the OECD Guidelines596. The NAP, published in October 2014, is

595 This section is built upon the information of the five NAPs on the UNGPs, all available at: http://ec.europa.eu/growth/industry/corporate-social-responsibility/in-practice/index_en.htm 596 The Committee was created in 2008 following to the Finnish Government Decree on the Committee on Corporate Social Responsibility, Helsinki, 4 December 2008, Section 1 (position and duties) and Section

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the result of a Government Resolution published in November 2012, in

which the involvement of other Ministries is foreseen, in particular,

Finances, the Environment, Social Affairs and Foreign Affairs.

- In Denmark, the Danish Council for CSR597 leads the way. Its President is

elected by the Minister for Business and Growth while the rest of its

members are independent representatives of CSOs such as trade unions,

industrials, Amnesty International or the national Red Cross. Apart from the

Ministry for Business and Growth, the Ministry for Trade and Development

is also involved. However, the Danish NCP for the OECD Guidelines is a

separate secretariat, the “Mediation and Complaints-Handling Institution for

Responsible Business Conduct”, also under the same Ministry for Business

and Growth, but within the Danish Business Authority. The strong point of

the Danish NCP is to be the only established by law598 and with ex officio

powers of investigation, although this capacity has not been used so far. The

Danish institutional building is the strongest point of their CSR, despite the

fact that the NCP could be part of the CSR Council (like in Finland). In any

case, Denmark is probably the Scandinavian country where the

Government’s role has been larger in promoting CSR, to discipline

businesses “without forcing the issue” and a powerful agenda-setting power

as well as influence on societal expectations599. Maintaining the voluntary

character of CSR regarding its contents, Denmark seems to support a

government-driven framework, unlike Finland or Sweden –less

enthusiastically active– and more similarly to Norway, where “the

government does not seem inclined to accept the ‘retreat of the state’

thesis”600.

2 (composition). Available at: https://www.tem.fi/en/enterprises/corporate_social_responsibility_(csr)/committee_on_corporate_social_responsibility 597 See http://csrcouncil.dk/ 598 Act No. 546 adopted by the Danish Parliament 18 Junes 2012. See: http://businessconduct.dk 599 The Danish policy might have just a few direct effects and be centre on “indirect (agenda-setting) effects”, it cannot be denied to be one of the most advanced countries in the promotion of CSR. S. VALLENTIN: “Governmentalities of CSR: Danish Government Policy as a Reflection of Political Difference”, in Journal of Business Ethics, Vol. 127 No. 1 (March 2015), pp. 33-47, at pp. 36 and 45 (citations). 600 A. WELLE-STRAND and M. VLAICU: Business and State Balancing International Development Agendas –The Case of Norwegian CSR”, in Journal of Politics and Law, Vol. 6 No. 3 (2013), pp. 103-116, at p. 109.

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- In the UK, the Ministry for Foreign and Commonwealth Affairs was

responsible for the Plan and the Minister presented it to the Parliament in

September 2013601. The technical direction is provided by the Department

for Business, Innovation and Skills, within which we find the British NCP to

monitor the implementation of the OECD Guidelines. However, in contrast

to Denmark, the British NCP is made up of civil servants supervised by the

Steering Board. Despite this, the British approach seems a good combination

between the internal and external dimension of CSR.

- In the Netherlands we also find a similar emphasis on the international

vocation of the NAP, precisely published by the Ministry of Foreign Affairs,

which also houses the Dutch NCP (created in 2007 and extended in 2011).

The Government clearly rejects the idea of the NCP having ex officio

powers602; however, according to a case study published by OECD Watch, a

recent complaint involving Royal Dutch Shell would have raised important

doubts about the NCP’s guarantees in terms of transparency and

predictability603. In June 2014 a new government decree only strengthened

the NCP competence to conduct wide researches and regular consultations

sector by sector, apparently without news about the complaint mechanism604.

- The Italian “Foundations of the Italian Action Plan on the UNGPs” are, as

its name indicates, a preliminary policy paper that should not be judged

according to the same criteria. Otherwise, it would be difficult to justify its

length (80 pages) and rhetoric style. In any case, it constitutes a prime

example of a problem against which we warned in the previous section:

excessively crisis-motivated and internally-oriented NAPs that ultimately

601 GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: Good Business. Implementing the UN Guiding Principles on Business and Human Rights, Presented to the Parliament by the Secretary of State for Foreign and Commonwealth Affairs by Command of Her Majesty, September 2013, Cm 8695. 602 “The government is not in favour of the Dutch NCP having similar, unconditional powers to carry out investigations”: MINISTRY OF FOREIGN AFFAIRS (Netherlands): National Action Plan on Business and Human Rights, April 2014, p. 35. 603 Two NGOs (Amnesty International and Fiends of the Earth Netherlands) filed a complaint to the Dutch NCP on an alleged violation of the OECD Guidelines following the diverse oil-spills in the Niger Delta. Shell headquarters firstly derived responsibility to the subsidiaries until the NCP obliged them to provide information since the Guidelines include subsidiary structures. However, the dialogue and mediation did not have any positive output and the environmental threats remain unaddressed. See: http://oecdwatch.org/cases/Case_197 604 Unfortunately, this decree is only available in Dutch. See: http://www.oecdguidelines.nl/ncp

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distort CSR, including details around completely off-topic issues such as

religious minorities, railway system, poverty, fight against drug addiction,

etc. (as if it was a general report for a UN monitoring body). As explained,

CSR is not about complying with already existing human rights treaties

ratified by EU Member States; it is rather about preventive and horizontal

strategies to foster human rights in their particularly complex interaction

with business activities. This unfocused approach is confirmed by the

presence of the Italian NCP within the Ministry of Economic Development,

who governs the incipient CSR policy in Italy.

Problems of understanding, however, are not exclusively Italian. The British NAP is

proud to enumerate the different international human rights conventions ratified by the

UK, but it forgets that it has not ratified any of the Optional Protocols of the Civil and

Political Rights and Economic, Social and Cultural Rights Covenants605, which are

essential to ensure the vertical effects of human rights, in other words, States’

accountability vis-à-vis the respective UN Committees. Denmark, to give another

example, has ratified the Optional Protocol of the ICCPR, but not that of the ICESCR,

obviously relevant in terms of business and human rights. It is curious to read in the

Danish NAP a reference to how they “actively tak[e] part in the Universal Periodic

Review process of the United Nations”606, which is largely identified as the weakest

human rights monitoring mechanism since it is an inter pares procedure607 with a more

than doubtful significance in terms of business and human rights. The only link with the

UNGPs is that, even at the first level of Ruggie’s Framework (on States’ duties), basic

failures –or omissions– are still visible, undesirably within the EU.

The common objective of all NAPs is to present some actions undertaken, without

many details on legal issues, and the future developments foreseen. The participation in

incident-based programs, with the recurrent examples of Bangladesh and Myanmar, are

a commonplace that does not, in substance, add anything new. The lack of technical and

605 For the state of signatures and ratifications see: https://treaties.un.org. 606 DANISH GOVERNMENT: Danish National Action Plan. Implementing the UN Guiding Principles on Business and Human Rights, March 2014, p. 11. 607 Indeed, the Universal Periodic Review is least advanced international human rights mechanism: more than a monitoring body, it might be defined as a body aimed at the promotion of human rights inter pares (States). It has, therefore, a political-diplomatic character and more general goals. C. VILLÁN DURÁN and C. FALEH PÉREZ: Manual de Derecho Internacional de los Derechos Humanos, Madrid 2012, Universidad de Alcalá, pp. 132-135.

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legal details makes us think of general policy papers or political statements rather than

true ‘action plans’ with objectives and deadlines, whereas the different strategies

designed by the Commission were far more concrete.

All five countries insist on their active engagement in the negotiations and decision-

making processes in the international fora and in Brussels, but not always in the same

direction: Finland expresses a clear disagreement with the on-going discussion on the

need of a new international treaty on business and human rights608, within the

framework of the UN Human Rights Council. The Netherlands stress that “there is too

little international support for an international, legally-binding instrument”609. Only

Denmark seems more supportive of extraterritorial obligations for companies and,

interestingly, proposes that the leader of this negotiation should not be the UN or the

EU, but the Council of Europe610. Both the UK and Netherlands insist on more liberal

understandings of CSR, private grievance mechanisms based on mediation and

facilitation, encouraging their companies to apply the same domestic standards in third

countries, but with no supervision or consequences. At the same time, all countries

except Denmark recall the debate on the definition of “due diligence”. In our view,

when academic discussions make their appearance on the political scene, it is likely to

reflect the lack of political will rather than a genuine International Law concern. Of

course due diligence is an indeterminate legal concept611. The problem of clarifying the

concept of ‘due diligence’ is repeated by the Netherlands, the UK and Finland; we will

just leave an open question: in terms of CSR, is it more appropriate to wonder “What is

sufficient” rather than “How much can be done?”

608 “It has been suggested within the UN Human Rights Council that a convention on the human rights liabilities of companies be made between governments, but Finland has not recommended this. In international human rights bodies, Finland has emphasised the development related to due diligence”. MINISTRY OF EMPLOYMENT AND THE ECONOMY –Labour and Trade Department (Finland): National Action Plan for the implementation of the UN Guiding Principles on Business and Human Rights, October 2014, Publication 46/2014, p. 14. 609 It further states that “extraterritorial application alone is not enough. A court judgement must also be enforceable, and it is not up to the Netherlands to decide for other countries whether this is possible. The government is therefore not convinced that legislation with extraterritorial impact will contribute to preventing human rights abuses by foreign companies in the countries in which they are active”. MINISTRY OF FOREIGN AFFAIRS (Netherlands): National Action Plan…, op. cit, p. 39. 610 “The Danish Government wishes to engage in the discussion on extraterritorial legislation as roclaimed in the UNGPs and as recommended by the Danish Council for CSR. […] The Government has recommended that the Council of Europe should take the lead on the issue of extraterritoriality”. DANISH GOVERNMENT: Danish National Action Plan… op. cit., p. 15. 611 We have signalled some of its problems in the general part of this study, see pp.

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The existing NAPs on the UNGPs further show that it is now quite commonplace in the

EU to refer to the social responsibility of state-owned companies or controlled by the

State. To this day, state-owned companies constitutes a relatively limited concept: it

should be considered to extend CSR to ‘State-participated’ companies, not necessarily

with the majority of the shares, and even to companies in charge of public services,

which is an increasing reality in the EU (and at a global scale). In this sense, the British

NAP on the UNGPs is the most complete when it declares its commitment to “review

the degree to which the activities of UK State-owned, controlled or supported

enterprises, and of State contracting and purchasing of goods and services, are executed

with respect for human rights”612, what could have an inspiring role.

In spite of all the limitations described so far, we have also found useful initiatives

shared by some countries: both the Netherlands and the United Kingdom, with a high

exposure to international trade and supply chains, have developed instruments to

provide the private sector with country assessments concerning the main human rights

risks depending on the regions and sectors. In practice, the Dutch “CSR Risk Check” is

an online tool, analytical and visual, to show this risks in function of diverse criteria

(child labour; pollution; discrimination and gender issues; etc.). Similarly, the British

“Overseas Business Risk (OBR) Service” gives the same type of information on the

most usual problems detected in countries where the UK trade and investment has a

presence, adding another interesting “Business and Human Rights Toolkit” specifically

addressed at officials. The UK has also funded an online hub in six languages to

promote the UNGPs. Similar sector risk analysis are planned or under development in

Finland and the Netherlands.

Related to this, a Dutch legislative proposal contemplated guarantees on access to

information for the general public, making it compulsory for companies to answer any

request regarding the origins and production phases of their products or services613.

Technically feasible, it remains in abeyance as the Dutch government considers it

should not be enacted yet: “the government does not feel that this is the right time to

enact such legislation”, in part due to its high costs. Regardless of the final decision, the

612 Emphasis added. GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: Good Business. Implementing… op. cit., p. 11. 613 The so-called “Production and Supply Chain Information (Public Access) Act (WOK). MINISTRY OF FOREIGN AFFAIRS (Netherlands): National Action Plan…, op. cit, p. 31.

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proposal has a clear potential to increase transparency and strengthen the interest of

companies to implement CSR and avoid serious reputational damages.

Finally, the UK has also passed the Bribery Act in virtue of which companies are held

responsible for acts of bribery regardless of the country in which they occur, showing

the important links between business activities, corruption and human rights614.

Transparency, access to information and accountability are key drivers of the fight

against corruption, which is recognised to be linked with human rights abuses in

developing countries and, therefore, should not be neglected in the intertwined design of

public/private and internal/external strategies of CSR.

In conclusion, alongside the delays, challenges and divergent opinions among Member

States, we have detected interesting policy options too. Sometimes, Member States have

been more audacious than the Commission, which has taken over after 2011 with its

Renewed Strategy. The following table summarises the most progressive initiatives

detected at a national level.

Table No. 2: National Policies in the EU: screening the best initiatives

614 OHCHR: Good Governance Practices for the Protection of Human Rights, New York – Geneva 2007, United Nations Publications (HR/PUB/07/4), pp. 59-79.

MAIN ISSUES OF NATIONAL POLICIES

BEST POLICIES IDENTIFIED

Definition of CSR

All endorse the Commission’s definition and the UN and OECD texts. Only the UK explicitly clarifies that “it is not the same as philanthropy or social investment”. (All lack of ILO and WTO related aspects). The UK and Netherlands more heavily rely on private-led initiatives.

Guidance for Companies

Netherlands: “CSR Risk Check”, tool including comprehensive country assessments on human rights’ risks in third countries, sector by sector.

UK: Similarly the “Overseas Business Risk Services”; the “Business and Human Rights Toolkit” (for officials); funding online hub in 6 languages (share companies experiences and inform on the UNGPs).

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Grievance mechanisms and NCPs

Denmark: NCP established by law and with ex officio investigation powers. President appointed by Minister for Business and Growth, but the rest of members are independent experts from NGOs and CSOs. The Danish “Mediation and Complaints-Handling Institution for Responsible Business Conduct” is a non-judicial but state-based institution governed by law.

Finland: the fact that the same Committee on CSR constitutes the Finnish NCP, avoiding the multiplication of institutions.

Extraterritorial obligations

Only Denmark supports the negotiations and shows an opened attitude, advocating for the leadership of the Council of Europe.

Public Companies

Only the UK goes beyond the restrictive concept of State-owned companies and plans to introduce CSR into “controlled or supported enterprises, and of State contracting and purchasing of goods and services”.

Implementing EU initiatives on CSR

(early assessment)

- Non-financial reporting requirements: France initiatives following to the “Grenelle II Law” (2010). Transposition deadline of Dir. 2014/95/EU expires 6 December 2016.

- UK Bribery Act : British companies are liable for acts of bribery committed anywhere in the world

- All EU Member States have transposed Directive 2013/36/EU on remunerations and gender balance in financial institutions.

- 19 EU Member States have NAPs on CSR; only 5 specifically on the UNGPs. Almost all EU Member States have several information and promotion initiatives (partnering, forums, etc.)

- 24 Member States have adhered to the OECD Guidelines on MNEs.

- None of the EU Member States have transposed arts. 41-46 of Dir. 2013/34/EU obliging the extractive industry to report on payments to governments.

- Public Procurement Reform pending: deadline 18 April 2016 (Dirs. 2014/24/EU and 2014/25/EU).

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CHAPTER IV

The potential of the EU’s contribution to global CSR

4.1 The potential of soft law in the EU

4.1.1. The initial guidance of the ECJ: introducing the debate

In assessing the potential of the EU initiatives on Corporate Social Responsibility, it is

fundamental to undertake an analysis of soft law instruments in the EU. There is a broad

range of such instruments: from Recommendations and Opinions, more widely used, up

to a plethora of Declarations, Resolutions, Action Programmes and Plans, Guidelines,

Communications of the Commission, Conclusions of the Council, and inter-institutional

arrangements, as we have seen in chapter III related to the emergence of CSR in the EU.

It is well known that soft law is not limited to CSR but has spread to all EU law fields.

Recommendations and Opinions are the only soft instruments provided for by article

288 TFEU, adding that they “shall have no binding force”, what reveals to be a rather

insufficient description given that there is a good number of other unmentioned acts

(like guidelines) that would also fall within the scope of that article.

As it happens with CSR, we lack of systematic and general studies on soft law in the

EU. The available literature agrees in maintaining Snyder’s early definition (1993) so

far as it conforms to the initial guidance of the ECJ: “rules of conduct which in principle

have no legally binding force but which nevertheless may have practical effects”615, to

what we can add that, obviously, it goes further than mere ‘rules of conduct’,

comprising political aspirations, interpretations of hard law provisions and a wide range

of other situations that we classify below. Snyder already noticed the “hardening” of

soft law once it passes through the filter of the ECJ, when the Commission takes it back

to apply it.

615 F. SNYDER: “The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques”, in The Modern Law Review, Vol. 56 No. 1 (January 1993), pp. 19-54, at p. 32.

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The starting point of this debate has some unavoidable benchmarks very recurrent in the

available literature on the subject, generally obsessed with measuring the legal force

from positivist paradigms rather than gauging its value from a pragmatic and realistic

approach, closer to what happens in the field. This is why we introduce the debate on

the potential of soft law taking the initial guidance of the European Court of Justice as

our starting-point. There is no doubt on the importance of Grimaldi, where the ECJ

accepted that soft law had to be taken into consideration to inform national Courts

decisions. Without giving further details on how this can be done, the Court

distinguished at first sight two functions of soft law, to complete and to interpret:

“The national Courts are bound to take recommendations into consideration in order to decide disputes submitted to them, in particular where they cast light on the interpretation of national measures adopted in order to implement them or where they are designed to supplement binding Community provisions”.616

Another off-cited example is Polska Telefonia Cyfrowa (PTC), a polish phone company

that challenged the imposition of new regulatory obligations following to 2002

Guidelines concerning electronic communications networks and services. The question

of this preliminary ruling was if such guidelines could be relied upon against

individuals, even if they hadn’t been translated into polish. In our view, the reasoning of

the Court has three steps. Quite surprisingly, the ECJ basically explains that there is no

“general principle of EU Law under which anything that might affect the interests of an

EU citizen must be drawn up in his language in all circumstances” 617, so we understand

the lack of translation is not allegeable to preclude the application of soft law

instruments (which most of the times are not available in all EU languages). The ECJ

secondly states that the guidelines under discussion are not reliable upon against

individuals because their intended recipients are national regulatory authorities (NRA).

However, at the end the Court concludes that nothing prevents the polish regulatory

authority referring to those guidelines in a decision “by which that NRA imposes certain

regulatory obligations on an operator”618. This solution was reached only after a textual

analysis that in no case precluded the possibility that Guidelines have legal effects.

616 Emphasis added. Case C-322/88, Grimaldi v. Fonds des maladies professionnelles, Judgement of 13 December 1989, para. 18. 617 Case C-410/09 Polska Telefonia Cifrowa, Judgement of 12 May 2011, para. 38. 618 Ibíd., para. 39.

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In other words, the Court implicitly acknowledges that soft law might have legal effects

in some cases. These instruments might be unlikely to generate direct obligations

allegeable against natural or legal persons, but they can indirectly and lawfully affect

their rights and obligations (for example, through national enacting institutions),

regardless of available translations and publication. In PTC, the Court did not shed

much more light but therefore clarified a key difference between ‘legally binding force’

and ‘legal effects’, the latter including in practice “legally binding effects”619. The

practical translation, again, is that the legal situation of natural and legal persons can be

affected in terms of their rights and obligations, but mostly through indirect

mechanisms.

Dansk Rörindustri et al. against the Commission is another seminal and recurrent case

in the literature on this subject. We face nine companies operating in the district heating

sector that produce or market pre-insulated pipes for that sector, who challenge a fine

for anti-competitive conducts imposed by the Commission according to the ‘Guidelines

on the method of setting fines imposed pursuant to Article 15(2) of Regulation 17 and

Article 65 of the ECSC Treaty’. The Grand Chamber reaffirms, one by one, in an

exhaustive and exceptionally long judgement, the arguments held by the Court of First

Instance. Relevant to us is the criteria followed to determine the legality of those

‘Guidelines’: “in setting out in the Guidelines the method which it proposed to apply

when calculating fines imposed under Article 15(2) of Regulation No. 17, the

Commission remained within the legal framework laid down by that provision and did

not exceed the discretion conferred on it by the legislature”620, what leads to the

rejection of all pleas in law: against the legality itself of the Guidelines (lack of

competence of the Commission), and against the pleas alleging a breach of the

principles of legitimate expectations and non-retroactivity. However, these problems

related to legal certainty persist and are not negligible, especially when soft law has an

interpretative character of the current legislation, as well as the problem of available

619 O. STEFAN: “European Union Soft Law: New Developments Concerning the Divide between Legally Binding Force and Legal Effects”, in The Modern Law Review, Vol. 75 (2012) No. 5, pp. 879-893, at pp. 885-887. 620 Joined Cases C- 189-02 P, C-202/02 P, C-205/02 P to C-208/02 P and C-213/02 P, Dansk Rorindustri et al. v. Commission, Judgement of 28 June 2005 (Grand Chamber), para. 252.

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translations621 and the due publicity of norms. Despite these pertinent doubts, the Grand

Chamber absolutely defends such soft instruments provided some conditions:

“In adopting such rules of conduct and announcing by publishing them that they will henceforth apply to the cases to which they relate, the institution in question imposes a limit on the exercise of its discretion […] It cannot therefore be precluded that, on certain conditions and depending on their context, such rules of conduct, which are of general application, may produce legal effects”.622

A close analysis of ECJ’s settled case-law is Stefan’s comprehensive thesis in the area

of competition law and State aids, where soft law is widespread, in which the author

shows that EU Courts use both hard and soft norms, very particularly to clarify the

interpretation of hard law623. The scholarship’s interest has mainly targeted this

phenomenon: how Courts confirm the interpretative character of soft instruments.

Another way to express the same difference between legal force and legal effects would

be to use the expressions ‘rules of law’ and ‘rules of practice’, reminding Snyder’s

reference to ‘practical effects’. After Stefan’s quantitative and qualitative scrutiny of

soft law in the field of competition law and State aids, it appears that there is some

judicial recognition of the role of soft law in its interaction with classic norms, detecting

feedbacks between them that better approximate the complexity and heterogeneity of

any regulation in order to abandon monolithic visions of law. We have seen that the

ECJ essentially checks if “soft law instruments remain in the boundaries fixed by hard

law”624, and at the same time, it can be beneficial to the extent soft law can detail

previous regulations and thus reduce the Commission’s margin of discretion625, as we

have also noted in Danks Rorindustri et al..

More recently, and moving to a different law-field, the General Court has confirmed

this approach: while ruling the annulment of an aspect of the Eurosystem Oversight

Policy Framework published by the ECB. Once again, it was acknowledged that soft

instruments emanating from EU institutions can perfectly have legal effects and

621 The problem of available translations, an obligation rejected by the Court as we have seen since the PTC judgement for soft instruments, could be argued from article 4 item 2 of TEU (equality of Member States) together with the principles of democracy and legal certainty. 622 Ibíd., para. 211. 623 O. STEFAN: Soft Law in Court. Competition Law, State Aid and the Court of Justice of the European Union, The Netherlands 2013, Wolters-Kluwer Law International, 367 pp., passim. However, the limitation of Stefan’s work is that it mainly focuses on soft law when it has an interpretative function of hard norms, leaving aside many other manifestations of soft instruments. 624 Ibíd., p. 142. 625 Ibíd., p. 179.

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subsequently be under the Court’s scrutiny: “ [A] n action for annulment is available in

the case of all measures adopted by the institutions, whatever their nature or form,

which are intended to have legal effects”626. A meticulous textual analysis was

undertaken to assess the context, the level of specificity, the wording, ultimately, the

content and scope of the policy framework to finally conclude its originality with regard

to the regulation it was supposed to clarify and, above all, the unlawful addition of a

requirement absent in the parent-regulation (to be located in a Member State party to the

Eurosystem for central counterparties involved in the clearing of securities). This

additional requirement surpassed the boundaries of hard law, then suggesting some kind

of hierarchy in their interaction. The Court is consistent with its previous case-law even

if it seems an innovative approach to the extent it expressly “take[s] into account the

perception of the Policy Framework”627. This rather psychological or anthropological

way of thinking of the Court is perfectly legitimate and understandable to overcome the

white and black logic of legal positivism, despite the eventual unease of lawyers, in

view of the increasing complexity of EU integration. Soft law, if reasonable and within

the hard law limits, may have unquestionable effects, even if indirectly. Whenever it

deems to be necessary, the ECJ has pronounced itself on soft law. The ECJ therefore

supports our pragmatic view under which substantive criteria have to be considered

beyond purely formal ones when assessing the potential of these new instruments,

reducing the prominence of rather classic nomen iuris discussions628. It seems logical

that material reality prevails over formalities: any legal order takes place in a social

setting in which coercions can be institutional, but also practical, if we assume the

contribution of legal anthropology: social and market coercions are not to be

neglected629.

626 Emphasis added. Case T-496/11, United Kingdom of Great Britain and Northern Ireland v. European Central Bank, Judgement of 4 March 2015, para. 30. 627 Ibíd., para. 42. 628 Settled case law to reaffirm the ECJ judicial review of any act with “legal effects” regardless of its formal denomination has its origin in case 68/86, United Kingdom of Great Britain and Northern Ireland v. the Council, Judgement of 23 February 1988, as commented by U. DRAETTA: Elementi di diritto dell’Unione Europea. Parte Istituzionale, ordinamento e struttura dell’Unione Europea, Milano 2009, Giuffrè Ed., pp. 278-279. Also see: G. STROZZI and R. MASTROIANNI: Diritto dell’Unione Europea. Parte Istituzionale, Torino 2011, G. Giappicheli Ed., pp. 296-300. 629 F.M. ZERILLI: “The Rule of Soft Law, an Introduction”, in FOCAAL –Journal of Global and Historical Anthropology, Vol. 56 (2010) No. , pp. 3-18, at p. 11. The “Bologna process” to restructure higher education in the EU and adapt it to the “3+2 system”, is a very clear example given by the author to show how coercion exists beyond hard norms: the text signed in Bologna was a simple declaration that usually never leads to hard obligations. Ibíd., p. 5.

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To relatively reassure lawyers and concerned civil society, some conclusions can be

drawn out of this initial guidance of the ECJ. First, the Court seems to distinguish quite

clearly between hard and soft law, putting them in context when required. Secondly, it

seems that there is the possibility of judicial scrutiny of these soft law instruments if

necessary (admissibility criteria are to be understood under this flexible substantive

approach on legal effects without fearing formal considerations, so that soft law will not

escape the control of the ECJ).

Finally, while the “legal effects” of soft law are recognised, abuses have generally been

annulled so we infer that soft instruments must operate within the framework of the

existing legislation, refraining from going further. It is finally true that its effects can

indirectly touch the rights and obligations of legal and natural persons, but rarely in a

direct way. Notwithstanding the importance of the ECJ initial guidance, we need to be

aware of its limits as it focuses on a very particular expression of the soft law

phenomenon, its interpretative function which, albeit a significant part, it actually

constitutes only one of its many manifestations.

4.1.2. Consolidation and taxonomy of soft law in the EU

To de-dramatize and expand the picture of this debate it is worth looking back at the

origin and consolidation of soft law in the EU. As it has been stated in the general part

of this research, soft law is nothing new neither to the EU nor to any international

organisation. The EU law-making processes have considerably evolved, overcoming the

Community method. The legislative procedures were already altered with the new

cooperation procedures in virtue of the Single European Act in 1987, then with the

introduction of the Co-decision (I) following to the Treaty of Maastricht (1992),

completely rearranged with the Treaty of Amsterdam in 1997 (so-called Co-decision II).

The legislative role of EU institutions correspondingly changed, while the EP was

gaining power.

The definitive boost of soft law in the EU comes in the 2000’s after the aforementioned

Lisbon Council: the Open Method of Coordination marks a before and an after,

formalising soft law procedures through flexible strategies and programmes,

implementation timetables, developing both qualitative and quantitative indicators, and

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completing the overall with periodic peer reviews as a sort of monitoring mechanism

via reporting commitments630. The OMC institutionalises what we would call ‘soft

procedures’: Member States and EU institutions have to work together to identify

common objectives and evaluate them through statistics, guidelines and indicators, and

the Commission has a general supervision over the coordination to ensure the exchange

of information and best practices, affecting mainly to education, employment and social

policies in general, but later on extended to other policy making. It normally agreed that

the output will rarely be a binding act (directives, regulations or decisions).

Particularly thought for social issues and later extended to other policies, the OMC

allowed maintaining an intense inter-governmental dialogue, while reaching some basic

common understandings and apparently fluidizing the EU multilevel governance.

Through the OMC, like a kid with a new toy, the EU definitely embraced soft law as

new predominant tool for governance631. The White Paper on European Governance

reinforced this mentality in the sense that the EU “must renew the Community method

by following a less top-down approach and complementing its policy tools more

effectively with non-legislative instruments”. It further explains that “legislation is often

only a part of a broader solution combining formal rules with other non-binding tools

such as recommendation, guidelines, or even self-regulation within a commonly agreed

framework” 632.

An Action Plan dated June 2002633 continued this trend, responding to a context in

which the enlargement, the difficulty to manage the acquis and the profusion of EU

Law, together with legitimacy concerns, were pointing to the need of improvements of

the legislative procedures, reducing the quantity and raising the quality634. We leave

aside the ideological debate around this “do less, do better” spirit and whether it is a

reflection of a deregulatory neo-liberal choice or, simply, a recognition of the

complexity of EU Law and the desire of making it more manageable.

630 Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000, para 37. 631 E. O’HAGAN: “Too soft to handle? A Reflection on Soft Law in Europe and Accession States”, in Journal of European Integration, Vol. 26 (2004) No. 4, pp. 379-403, at pp. 382-4 and p. 397. 632 COM (2001) 428, 25 July 2001, European Governance. A white paper, pp. 4 and 20. 633 COM (2002) 278 FINAL, 5 June 2002, Action Plan: Simplifying and improving the regulatory environment, p. 7. 634 It is the spirit of a “new legislative culture” and “new governance modes”, L. SENDEN: “Soft Law, Self-Regulation and Co-Regulation in European Law: Where Do They Meet?”, in Electronic Journal of Comparative Law, Vol. 9.1 (January 2005), www.ejcl.org, 26 pp., at pp. 5-11.

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We have to wait until 2003 to read the basic text, the Interinstitutional Agreement on

better law-making, where self-regulation and co-regulation are finally defined: both

involve private and public actors and the difference is to what extent. In the case of self-

regulation, the public role is smaller serving as a political inspiration without

compromising the future stance of institutions, only at a very general level supervising

its compliance with the Treaties or other general guidance and information of best

practices635. On the other side, in the case of co-regulation public authorities provide

with the legal framework –leaving room for concrete implementation but clearly within

the margins of legislation, by way of complement. This agreement constitutes an utterly

important step in the recognition of “alternative methods of regulation” and their

usefulness, provided of course their consistency with EU Law. However, we shall

highlight that “[t]hese mechanisms will not be applicable where fundamental rights or

important political options are at stake or in situations where the rules must be applied

in a uniform fashion in all Member States” 636.

The political background of the aforementioned documents is the EU looking forward

to regaining social acceptance and legitimacy, as the key words of these documents are

simplification, coordination, raising quality or reducing the volume of legislation, better

implementation and transpositions, transparency and accessibility, etc. In any case, the

boom of soft law precisely came since the 2000’s. A very common concern of EU

institutions has been to enhance public participation in the decision-making processes,

regarding both policy-making and law-making; the path is full of traps, of course, as we

might realise that the most powerful and economically interested will be more likely to

raise their voice. However, thanks to the new possibilities of the digital era, socio-

economic gaps can be less disabling in terms of access to information, public

participation and formation of civil society organisations for particular purposes.

In view of the success and extension of soft law instruments since the 2000’s, another

problem is to determine its outcome, also in order to evaluate its potential. In some

cases it is a pre-legislative soft law, such as the numerous Communications of the

Commission or the Green Paper, where the institutional impulse is likely to introduce 635 “Self-regulation is defined as the possibility for economic operators, the social partners, non-governmental organisations or associations to adopt amongst themselves and for themselves common guidelines at European level (particularly codes of practice or sectoral agreements)”. European Parliament, Council and Commission: Interinstitutional Agreement on better law-making, OJ 2003, C 321/01, para 22. 636 Ibíd., para. 17.

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the subjects into the political agenda637. On the other hand we find para-legislative

initiatives aimed at supporting the pre-legislative agenda via the creation of a favourable

environment based on the corporate awareness and extension of voluntary good

practices. Part of this institutional work is likely to become, sooner or later, binding

instruments as grows the international consensus in this respect (or at least, at a regional

level).

More systematically, we might divide soft law into three main categories following the

early but absolutely accurate terminology of Prof. Daniel Thürer638. First of all, pre-law,

as said before, is the most likely to crystallise into a legal act, but alongside its eventual

preparatory character, it also has an informative function (such as many

communications). We then find interpretative and decisional soft law, intended to give

further details on the exact application of previous EU law, in this sense a sort of post-

law, with which the Court has dealt confirming it despite the risk of adding provisions

absent of the parent-legislation, as we have seen above; c) thirdly we find para-law,

always according to Thürer’s terminology, which expresses some kind of political will

tending to create an agenda, a favourable climate of opinion, sometimes formally

(recommendations, explicitly covered by art. 288 TFEU) and many times informally

(declarations, conclusions, codes of conduct).

The taxonomic efforts include a different perspective that well deserves some comments

as it completes this functional perspective. Besides the ‘pre/post/para –law’ functions,

we have three other variables to be taken into account: the type of norm, the type of

obligation and the type of enforcement, in a way that any of them can be hard or soft,

understanding law as a continuum. This enables us to discover some captivating

categories. We find hard norms apparently including hard obligations that actually

637 P. DE LUCA: « La responsabilité sociale des entreprises en Europe », in Comparazione e diritto civile, Novembre 2012 (ISSN 2037-5662), pp. 9-10. Accesible at: http://www.comparazionedirittocivile.it (Relazione presentata al convegno italo-francese Il nuovo diritto internazionale degli investimenti tenutosi a Napoli il 26 maggio 2008 presso l’Università Federico II). 638 The first original work in this regard, which has inspired all the subsequent literature was: D. THÜRER: “The role of Soft Law in the Actual Process of European Integration” in O. Jacot-Guillarmod and P. PESCATORE (Eds.): L’avenir du libre-échange en Europe: vers un Espace économique européen?, Zürich 1990, Schultess Polygraphischer Verlag, pp. 131-133. Not surprisingly, the same author was tasked to summarise the concept in the prestigious Max Planck Encyclopedia of Public International Law. See D. THÜRER: “Soft Law”, in Max Plank Encyclopedia of Public International Law, www.mpepil.com, March 2009. This taxonomy, among the many available in the literature, is the most extended and functional. For a good summary of these concepts that emerge from the three main functions of soft law see: L. SENDEN: Soft Law in European Community Law, Oxford 2004, Hart Publishing, pp. 119-120.

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derive into very soft enforcement mechanisms, such as the Treaty on Stability,

Coordination and Governance: in 2002-2003 Germany and France were not sanctioned

for violating the debt and public deficit objectives, as the enforcement depended upon

the arbitrary willingness of the contracting parties; enforcement mechanisms have only

been strengthened after the 2012-13 reforms639. We also detect hard norms with no

enforcement at all: the Common Foreign and Security Policy (CFSP) is a corpus of

legally binding acts (arts. 28 and 29 TEU) but compliance of Member States with the

CFSP is –in most of its aspects if not entirely– excluded of the ECJ jurisdiction. This is

an interesting invitation to demystify hard norms, from a formal point of view, as

everything finally depends on the obligations and on the way they are intended to be put

in practice. According to this taxonomy we also have soft law leading to hard

obligations, for example when this soft law corresponds to a post-law function, i.e.,

interpretative and decisional.

In summary, if we combine the classification based on the functions of soft law

(pre/post and para-) and the analysis centred on the dialectic between types of

obligations and enforcements, we observe that soft obligations with hard enforcement

generally correspond to post-law functions (its interpretative character). Sometimes, soft

law instruments with a post-law character might present hard obligations with hard

enforcement mechanisms, but we have seen that these situations are more likely to be

seen as an ‘abuse of soft law’ and to be annulled by the ECJ. In any case, the main issue

when dealing with post-legislative soft tools is the way they are administratively

hardened and, in this regard, relevant doubts on judicial review and guarantees might

arise. We also face soft obligations with soft enforcement (the paradigm of soft law):

these are more common in para-legislative situations (mainly for political objectives, as

the OMC). In other cases we find supposedly hard obligations with soft enforcement,

when a para-legislative function is again predominant to assure flexibility in

anticipation of politically or socially fluid circumstances. Finally, when a preparatory

character is at stake, the pre-law function is predominantly expressed through two

combinations: ‘soft obligation / soft enforcement’ and hard obligation/ soft

639 This classification and examples have been taken from F. TERPAN: “Soft Law in the European Union: The Changing Nature of EU Law”, in European Law Journal, Vol. 21 No. 1 (January 2015), pp. 68-96, at pp. 78-79. The open method of coordination would correspond to soft obligations (almost inexistent or merely declarative) but with soft enforcement through procedures and monitoring means.

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enforcement. The table below summarises the predominant functions that correspond to

the combination of both taxonomies related to soft law.

Table No. 3: Taxonomy of Soft Law and CSR in the EU

640 These examples are not exhaustive. All have been studied in detail in Chapter III, Section 2. 641 These examples are not exhaustive either. All have been mentioned in this section. 642 This is further explained at p. 260 (and footnotes therein).

Type of

Obligation

Type of

Enforcement

Predominant

Function

CSR Examples640 (and

type of instrument)

Other Examples641

(and type of instrument)

Soft

Soft

Para-law or

pre-law

Green Paper (2001) (soft instrument) Renewed EU Strategy for CSR 2011-2014 (soft instrument) Articles 1, 4 and 9 of the Cotonou Agreement 2010 (hard instrument). Brussels Declaration of the II EU-CELAC Summit June 2015 (soft instrument)

Open Method of Coordination (soft instrument of discussable effectiveness).

Soft

Hard

Post-law (or proper norms)

Regulation 1221/2009 on the voluntary participation in the EMAS (hard instrument). Article 41-46 of Directive 2013/34/EU (reports on payments to governments by the extractive industries) –hard instrument.

In the infringement procedure642: the Com. “may bring” the case (art. 258 TFEU, soft obligation). But the Com. has “hard enforcement” mechanisms (preventive measures in the agricultural and fisheries policies) to make States comply with soft instruments (letters of notice).

Hard

Hard

Post-law or proper norms (higher risk of ‘abuse of soft

Regulation 1286/2014 on Key information documents for small and retail investors. Civil liability if the KID is “clearly misleading or inaccurate” (hard instrument).

Location policy on CCPs included in the Eurosystem Oversight Policy Framework of the ECB. ‘Soft instrument’ annulled

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In light of these characteristics we understand the success of the so-called theory of

hybridity in EU Law, by virtue of which we cope with “hybrid constellations in which

both hard and soft processes operate in the same domain and affect the same actors”643,

which is an increasing reality. The presence of hard and soft norms governing the same

policies makes us think of two convergent “routes” towards the same objective. This

view synthesises rationalism and constructivism: the first because it still gives

importance to formal nomen iuris distinctions, and the second because it sensibly

accepts that both hard and soft instruments can complement each other and diversely

contribute to improve compliance with socially responsible standards and, in general

terms, with human rights (or with employment objectives or any other EU policy). Soft

law, born of new governance modes boosted after the 2000’s, has a growing influence

on law-making processes and taking into account their legal effects, it does not seem a

reversible phenomenon in the EU.

4.1.3. Assessment

Despite these classifications, we walk on an unstable ground difficult to systematise,

where generalisations are strongly inadvisable and where experimentation is

commonplace. It is delicate to look for “spill-over effects” between sub-categories of

soft-law or between sectors in which soft law plays any role. The opportunities are as

big as the perils in terms of democracy and legitimacy: soft law can perfectly be used to 643 D. M. TRUBEK, P. COTTRELL and M. NANCE: “‘Soft Law’, ‘Hard Law’ and European Integration”, in G. De BURCA and J. SCOTT (Eds.): Law and New Governance in the EU and the US, Oxford 2006, Hart Publishing, pp. 65-94, at p. 67.

law’ if the type of instrument is soft)

Directives 2014/24/EU and 204/25/EU on public procurement: possible exclusion from public contracts (hard instrument).

by the ECJ in case T-496/11 (‘abuse of soft law’)

Hard

Soft

Para-law or Pre-law

European Investment Bank Environmental and Social Handbook (para-law –‘internal code of conduct’, soft instrument).

Articles 28-29 TEU compliance of Member States with the CFSP but excluded from the ECJ’s jurisdiction: hard instrument, hard obligation, but no enforcement.

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circumvent the appropriate legislative procedures644. As any tool, the problem at the end

is the user.

We firstly would like to suggest that the Commission might be tempted to use soft law

as a new arm to increase its own influence in the inter-institutional balance of power.

Let’s anyway recall that the ECJ is prompt (and keen) to annul any eventual abuse of

soft law, as already noted. Extensive debate is written on the inter-institutional battles,

in which we do not enter, if not to suggest that the role of soft law has been forgotten. It

is generally accepted that the change from co-operation to co-decision procedures

increased the power of the EP ever since. The Parliament wanted to go further its

agenda-setting power and it focused on the obtention of a full veto prerogative (after

Maastricht). This traditional strategy of the Parliament to obtain a veto power, somehow

underestimated the fact that the capacity of determining or influencing the agenda leads

to a far from negligible political power, compared to the institution whose task is facing

the proposals (despite its eventual veto); nothing new under the sun, it is the classical

debate between presidential and parliamentary systems with respect to the legislative

agenda. Quantitative studies demonstrate in the overall the greater acceptance of EP’s

amendments with the co-decision system, in other words, an apparently increasing

power of the Parliament. Without denying this fact, we must nevertheless draw attention

to critics645 who have revised the available studies in this regard and, following similar

quantitative and qualitative surveys, have also concluded that, at the same time the

Commission seems to lose the battle, the EP is also loosing part of its influence on the

agenda-setting despite its new ‘veto toy’646.

This is fully consistent with our work on CSR in the EU, as most of the initiatives come

from the Commission. A relative loss of influence in the agenda-setting might have

been the price paid by the EP to get an unconditional veto power. And to some extent,

apart from specific CSR issues, this dynamic could also explain the boost of soft law

instruments since the 2000’s, as the new strategy of the Commission to exercise its

644 L. SENDEN: op. cit., pp. 30, 447 and 475 (for the incipient but unclear spill-over effects) and p. 334 (for the Commission escaping legislative procedures and using soft law “as a tool in the institutional balance”). 645 G. TSEBELIS, C.B. JENSEN, A. KALANDRAKIS and A. KREPPEL: “Legislative Procedures in the European Union: An Empirical Analysis”, in British Journal of Political Science, Vol. 31 No. 4 (Oct. 2001), pp. 573-599, at pp. 576-579 and 596-597. 646 There are many different positions on the relative “empowerment of the EP” and to what policies may apply that veto: S. HIX and B. HOYLAND: “Empowerment of the European Parliament”, in Annual Review of Political Sciences (London School of Economics), No. 16 (2013), pp. 171-189.

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power and maintain a high level of influence over the two other institutions. The EP

logically complained of being left aside in such initiatives, what bitterly shows this loss

of influence and the importance it gives to them: the EP “considers the open method of

coordination to be legally dubious” and “deplores the use of soft law by the

Commission where it is a surrogate for EU legislation that is still necessary per se,

having due regard to the principles of subsidiarity and proportionality, or were it

extrapolates the case-law of the Court of Justice into unchartered territory”647. However,

the Parliament does not defend an absolute ban of soft law instruments, but asks to be

consulted and to establish a proper mechanism of inter-institutional dialogue leading to

the adoption of soft law instruments648, a clear recognition of their potential importance.

Is it a pure advocacy of democratic values or a new episode of inter-institutional battles?

This is commonplace in European integration and, extrapolating the debate, we could

also wonder if the law-making capacity of the ECJ isn’t in fact –to some extent– also a

backdoor judicial constitutionalisation of the EU.

A nuanced discussion would conclude that, behind the Parliaments’ and the

Commission’s positions we find both sincere concerns in terms of legitimacy and

democracy and, also, a part of institutional battles. At the same time, desirable or not,

soft law continues to expand and some consider it a form of “delegalisation” of the EU:

“t]he use of soft law, together with the application of new forms of governance and the

relative decline of the Community method, would bring the EU closer to classical

international organisations”, a sort of “normalisation” which could be both positive and

negative for the future of the EU integration649.

More broadly, depending on the purpose of soft instruments, they might present

different advantages and disadvantages650. The reconciliation of a globalised economy

and international human rights law needs to go through different paths at the same time

and cannot rely anymore exclusively on vertical obligations and States’ responsibilities.

Not always hard law is the paradigm of neither precision nor the panacea to human

rights issues. Hard law’s tendency towards the fossilization of legal solutions is far from

647 EUROPEAN PARLIAMENT: “Resolution on institutional and legal implications of the use of ‘soft law’ instruments”, 2007/2028(INI) P6_TA (2007) 0366, OJEU C 187 E/, 24 July 2008, pp. 75-79, para. 4-5. 648 Ibíd., para. 17. 649 F. TERPAN: “Soft Law in the European Union: The Changing Nature of EU Law”, in op. cit., at p. 95. 650 A good summary of the pros and cons at: D. CHALMERS, G. DAVIES and G. MONTI: European Union Law, Cambridge 2014, Cambridge Univ. Press, pp. 114-116.

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the current needs of flexible and practical mechanisms to foster human rights horizontal

effects, as we have already said, among legal and natural persons. Substantial changes

in circumstances are more and more common, making it necessary to have available –as

a complement– more flexible mechanisms of self and co-regulation, which are more

easily amendable. It seems important to leave room for experimentation when we are

still not sure on what is the best stance to be adopted and, therefore, it seems reasonable

to avoid the difficult and slow modification procedures of hard law. In case of error, soft

law instruments do not imply the major negative consequences that might derive from

classic legislative initiatives. Moreover, effectiveness and coercion are not necessarily

correlated; the participation of all relevant stakeholders may help them internalise

conducts and practices before these “eventually” become obligatory, apart from taking

conscience of their social responsibility. Stakeholders are both internal and external to

companies and new technologies and cheaper communication networks can help to

materialise more opened participation systems in the decision-making procedures,

including the poor and voiceless. Finally, soft law approaches can also be more

sensitive to diversity between Member States, especially as the lack of legal personality

of transnational companies persists hampering their liability even in cases of human

rights violations.

Having said that, we are under no illusions that many legal doubts remain concerning

these new governance modes and their impact or effects on EU Law. Most objections

point to the fact that soft law can aggravate the EU’s democratic deficit because it

doesn’t follow the normal legislative procedures and, accordingly, lacks of legitimacy to

generate any legal effect, even indirectly. Sceptics blame it to be the new strategy of EU

institutions to circumvent democratic legislative procedures. The proceduralization and

administratization of European governance tends to forget that the decision-making

process is not an end in itself, but a mean to achieve a goal. It is essential to continue to

be vigilant in the final output and whether we are contributing to a sort of neo-feudal

privatisation of law-making. The notions of ‘stakeholders’ and ‘public participation’ is

perfumed with inclusiveness and transparency, but it can become a trap behind which

European corporatisation hides the project of revitalising a lobbyist market-based

European project rather than a rights-based Europe651. A calm and reasoned assessment

651 A. SOMMA: “Some like it soft. Soft Law e Hard Law nella costruzione del diritto private europeo”, in A. SOMMA (a cura di): op. cit., pp. 153-171, at pp. 167-171.

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might recognise the risks but also acknowledge the opportunity to improve traditional

participative democracy, completing it with new tools from the so-called deliberative

democracy. However, according to detractors, in addition to these alleged formal

illegality and ideological inadequacy, moving to what happens in practice, its voluntary

nature and programmatic character are seen as insufficient to give rise to truly positive

changes.

Critics further claim that soft law undermines citizens’ legal certainty and causes

confusion as for their legitimate expectations. Under this point of view the Commission

exceeds its competences in a breach of the conferral of powers enshrined in art. 5 TEU.

As soft instruments are formally not considered ‘legislative acts’, the Commission

seems to be enabled to escape the provisions laid down in the Protocol No. 2 on the

application of the principles of subsidiarity and proportionality, such as the obligation

to widely consult (art. 2) and inform national Parliaments and the other EU institutions

(art. 4). We also noted earlier that soft law is usually not available in all EU languages

what may rise problems under article 4 TEU on “the equality of Member States and

their national identities’, besides the problem of publicising norms to contribute to legal

certainty if we accept that soft instruments can perfectly have legal effects –as stated by

the ECJ.

No need of ambiguous legal jugglery: it is our understanding that these imperfections

can be corrected, for example, amending Protocols No. 1 and 2 in order to include an

article referred to ‘other initiatives with legal effects’ and not only ‘legislative acts’,

what would be perfectly consistent with the initial ECJ case-law. The amendment of

Protocols does not seem realistic, but an easier option would be an inter-institutional

agreement to ensure information exchanges and consultation between EU institutions

and between them and Member States when dealing with soft law, in view of its

increasing importance and therefore preserving another core principle, that of sincere

cooperation (art. 12 TEU). In doing so, the unsuccessful Open Method of Coordination

would be relatively updated and adapted to the actual potential of soft law. In any case,

we consider not completely fair the criticism based on democratic values and, more

concretely, the supposed incompatibility between soft law and legal certainty or

legitimate expectations. Soft law has also proved to have some potential regarding the

limitation of the Commission’s margin of discretion in its work and, looked at from that

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angle, it can contribute to clarify expectations and increase certainty, provided the

correction of the above-mentioned imperfections.

CSR and soft law

In the case of CSR, we have noted from our previous research that most CSR soft

initiatives would have pre-legislative and para-legislative functions and, therefore, are

less problematic in view of this pros and cons discussion –as seen through the ECJ case

law, most of the problematics arise with its post-law manifestation. Most of the CSR

advancements so far could be classified within these pre- and para-legislative functions,

less problematic as they are intended to prepare the field and involve all actors, while

promoting concrete results and creating a favourable political and social environment

for its further development.

On another front, we understand that soft law has per se some potential, regardless of its

eventual hardening, even if this should not be discarded. In fact, we are witnessing the

gradual introduction and mainstreaming of CSR issues in post-legislative soft

instruments of a variety of policies, and even a progressive hardening of CSR, though

very incipient. ‘Hardening’ processes should not come as a surprise to anyone. Before

2009, the Nice Charter has a number of similarities with an inter-institutional

agreement652: the intervention of all institutions and Member States in the drafting, the

importance of the consensus between the Council, the Commission and the Parliament

and its final solemn proclamation, bringing it near to soft international declarations. Not

only that, the main obligations fell to EU institutions, who committed to respect the

Charter in their work. Despite these obvious limitations, most of the public opinion and

politicians were pleased to welcome the Nice Charter and its potential was clear. Of

course, as is well-known, its hardening came only after the entry into force of the

Lisbon Treaty in December 2009, when the Charter was upgraded to the same legal

value as the Treaties; but even before being granted this treaty-level, the ECJ has a

652 E. MOSTACCI: La Soft Law nel Sistema delle fonti: uno studio comparato, Padova 2008, CEDAM, pp. 78-85.

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number of references to its provisions “on a quite number of occasions”653, as we have

seen with many other soft instruments we cited.

In chapter III we have already referred to some significant examples that it is worth

recalling at this point to interpret them as a kind of CSR ‘legal spill-over’, the most

important of which are the following: 1) Directives 2013/34/EU and 2014/95/EU on

non-financial reporting requirements; 2) Directives 2014/24/EU and 2014/25/EU which

constituted a wide public procurement reform novelty including CSR conditions; and

the current proposal for a Directive –under discussion between EU institutions– on

responsible supply chains of minerals from high-risk and conflict-affected areas654. We

start to observe CSR transfers: to post-law soft instruments but also to hard norms that

start to include unprecedented provisions that invites us not to discard any potential

hardening, even though the main function of CSR up to now has been preparatory and

predominantly soft, what is absolutely not a demerit or a sign of uselessness.

On a general note, it is understood that CSR consists of going beyond the already settled

legal standards, but the possibility of adding new regulatory options enriches the

situation and is likely to facilitate the attainment of corporations’ responsibility,

involving them in the process, as important economic operators, together with civil

society, social partners, non-governmental organisations and associations. Obviously,

we do not discuss that without the sword of Damocles of hard law, soft law might lose

part of its usefulness. The interest of this process is precisely the mixture of instruments

and initiatives that well deserve the effort to put things in order so as to properly gauge

the value of the on-going work. In this sense, most of the times we face soft and hard

norms when dealing with almost any EU policy, so that their interaction marks the

practical outcome, influencing the legal effects (directly for classic legislative initiatives

or indirectly applied by Courts when dealing with soft norms). We even have cases,

such as nanotechnologies655, in which the majority of legal instruments available are

653 G. De BURCA : « After the EU Charter of Fundamental Rights : The Court of Justice as a Human Rights Adjudicator ? », in Maastricht Journal of European and Comparative Law, Vol. 20 No. 2, pp. 168-185, at p. 169. 654 See chapter III, Section 2.3. 655 E. PARIOTTI and D. RUGGIU: “Governing nanotechnologies in Europe: Human Rights, Soft Law and Corporate Social Responsibility”, in H. VAN LENTE, C. COENEN, K. KONRAD, L. KRABBENBORG, C. MILBURN, F. SEIFERT, F. THOREAU and B ZÜLSDORF (Eds.): Little by Little: Expansions of Nanoscience and Emerging Technologies, Heidelberg 2012, IOS Press/AKA-Verlag, pp. 157-168.

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soft, an emblematic field where the potential benefits of soft law are clear in terms of

flexibility and adaptability to further developments.

At the end of the day, even though the Rousseaunian myth of the noble savage is over, it

would be too pessimistic to say that State’s coercion –by itself and taken alone– is the

primary purpose or raison d’être of any legal system. We rather think that legal orders

look forward to reaching relatively just and peaceful solutions to social problems or the

achievement of certain public goods656. The need and usefulness of State’s

responsibilities in terms of human rights is not discussable at all, ensuring the vertical

effect of human rights. However, as explained in the general part of this work, at this

stage of globalisation it seems naïve to totally rely on these vertical effects, without

stimulating as well forms of human rights respect through their horizontal effects657, in

the relationships among individuals and between individuals and corporations. It is in

this field where soft law might make its main contribution, unlike those who say that

only hard law can contribute to the achievement of human rights goals. We have already

seen that international human rights treaties and other hard mechanisms are not the

panacea. The unfortunately marginal role of human rights in CSR issues is due to this

school of thought that only accepts the benefits of hard law and is not able to imagine

the potential of strongly mainstreaming human rights into soft law so as to foster their

horizontal effects. We tend to a teleological approach to the rule of law, why not

including soft law instruments if they contribute to get closer to solutions and a better

society, as a complement rather than a replacement of hard law. Finally, the interest of

soft law is not only due to its eventual hardening, it actually has a potential per se.

Obviously, to adequately use this tool, we should equally raise awareness on the traps

behind this process.

656 We do not share the divinisation of the monopoly of the violence and institutional coercion mechanisms as the most effective ways to achieve any goal, in contrast to classic literature: H. KELSEN: Pure Theory of Law, London 2009, The Lawbook Exchange Ltd., 399 pages, passim. 657 As commented in the first part of this work, the idea of horizontal human rights duties is highly controversial. It is also worth reading: E. PARIOTTI: “ ‘Effetto orizzontale’ dei diritti umani e impresse transnazionali nello spazio europeo”, in I. TRUJILLO and F. VIOLA (Eds.): Identità, diritti, raggione pubblica in Europa, Bologna 2007, Il Mulino, pp. 171-201.

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4.2. Access to justice: an open question

4.2.1. Premises on corporate extraterritorial responsibilities

Many of the official documents studied indicate that CSR policies and the incipient sets

of rules are still under development and could have a stronger impact, especially if they

were accompanied with effective mechanisms to investigate, punish and compensate

eventual breaches, as recurrently noted by the EU institutions (in particular, by the

Parliament). John Ruggie’s UNGPs attach great importance to access to justice in their

third level, the remediation, in which it is said that effective judicial mechanisms are at

the core of ensuring access to remedy as stated in Principle 25. Principle 26 further

provides that “States should take appropriate steps to ensure the effectiveness of

domestic judicial mechanisms when addressing business-related human rights abuses,

including considering ways to reduce legal, practical and other relevant barriers that

could lead to a denial of access to remedy”, respecting the characteristics of due process

in such a way that “States should ensure that they do not erect barriers to prevent

legitimate cases from being brought before the courts […]”658. In the dialectic between

hard and soft law, the second cannot exist without the first one and access to justice

looks simply unavoidable, but the definition on ‘legitimate cases’ remains unclear.

To ensure a useful and positive implementation of CSR initiatives, access to justice is

the necessary threat of hard law, as recognised by the UN, in this mixed CSR scheme.

Alleged victims of transnational companies face multiple obstacles among which we

highlight the lack of guarantees of many domestic judicial systems (in developing States

or in fragile and failed States), general misinformation on access to remedies,

difficulties in acceding to legal aid and unknown procedural barriers –mainly ratione

personae and ratione loci. In general terms, we could summarise there is an inequality

of arms between alleged victims and authors, in the absence of institutional support for

legal disputes that, in fact, should be matters of general interest.

It is utterly important to make some terminological distinctions to properly introduce

this debate, starting with the essential difference between the private interest of the

litigants and the public interests of the forum: there are many factors that need to be

658 UN Doc. A/HRC/17/31, 21 March 2011, op. cit., Principle 26.

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balanced. In talking about remedies, most people immediately think of judicial levers.

The UN International Law Commission distinguishes three types of jurisdiction:

prescriptive (norms or legislative acts), adjudicative (judicial review) and enforcement

(executive)659. All three might have extraterritorial expressions, but in CSR the debate is

centred on ‘extraterritorial adjudicative jurisdiction’, as far as the other two possibilities

(extraterritorial legislation and enforcement) are –prima facie– much more difficult to

reconcile with art. 2.7 of the UN Charter. States have the possibility to exert an

extraterritorial adjudicative jurisdiction; “[h] owever, a State exercises such jurisdiction

in the interest of the international community rather than exclusively in its own national

interest”660, indirectly recognising the existence of superior interests of the international

society.

Working on John Ruggie’s matrix on extraterritoriality, the initiatives to make

companies ‘accountable’ should not be limited to judicial liability: there is a myriad of

less problematic and not-less-important measures “with extraterritorial implications”661,

particularly in public procurement, export credit agencies and non-financial reporting

requirements: the EU has very opportunely understood this, as we have seen analysing

the level of implementation of CSR policies. It is less problematic in terms of

International Law because “the State is not exercising extraterritorial jurisdiction, but

simply its territorial jurisdiction with extraterritorial implications”. Indeed,

extraterritoriality is not the “magic potion” to definitively solve human rights abuses by

TNCs: corporate responsibilities are not limited to “liability”, which is only an aspect of

their “accountability” to be added to reputational risks, stock markets effects, public

contracts, etc.662

This is not to deny the usefulness and importance of effective judicial mechanisms; it is

only aimed at underlining that incident-based and judicially-limited strategies by home

States of TNCs may eventually lack of long-term effects on the problems at host States:

lack of governance, human rights structural weaknesses, and consolidated corruption.

659 UNITED NATIONS: Report of the International Law Commission, Fifty-eighth session, New York 2006, UN Doc. A/61/10, pp. 516-519 (Annex E on Extraterritorial Jurisdiction, see in particular para. 5). 660 Ibíd., para 16. 661 Less problematic because the “State is not exercising extraterritorial jurisdiction, but simply its territorial jurisdiction with extraterritorial implications”. N. BERNAZ: “Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?”, in Journal of Business Ethics, Vol. 117 No. 3, pp. 493-511, at p. 496. 662 Ibíd., on the “wider notion of accountability”.

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There is a need for a pragmatic and holistic approach to extraterritoriality in order to

abandon the idea it constitutes the final panacea.

States have for the moment no obligation to adopt exterritorial human rights measures

as far as, strictly speaking, each State is the sole responsible for the respect of human

rights within its own jurisdiction. Obviously, the “business and human rights” studies

have shown that the overreliance on vertical effects and State responsibilities fail to

effectively address many human rights’ abuses by TNCs, since globalisation has created

a governance gap. Under International Law, it early arose that what is not prohibited

might be permitted663: the lack of an obligation does not necessarily mean it is unlawful

to act, and has not impeded an increasing international opinio iuris and practice in this

direction, starting with many General Comments and Concluding Observations of UN

bodies664, though insufficient to speak of any customary obligation yet.

Given that this consensus is under construction, it is again advisable to remain realistic

and pragmatic. A further distinction has to be made between criminal and civil

responsibilities, bearing in mind that many legal orders do not contemplate criminal

offences for legal persons (companies). There are authoritative voices that advocate for

the criminalisation of human rights violations, “including those that take place outside

the EU”665, and there is no doubt that many international instruments in humanitarian

law and international criminal law already include partial obligations for non-State

actors666. Its origin is the Nuremberg trials under the US Military Tribunal and Control

663 “International law governs relations between independent States. The rules of law binding upon States therefore emanate from their own free will as expressed in conventions or by usages generally accepted as expressing principles of law and established in order to regulate the relations between these co-existing independent communities or with a view to the achievement of common aims. Restrictions upon the independence of States cannot therefore be presumed”. PERMANENT COURT OF INTERNATIONAL JUSTICE: Case of the S.S. “Lotus”, Judgment No. 9 of 7 September 1927, p. 18 (emphasis added). This was very controversially confirmed when the ICJ had to assess lawfulness of the secession of Kosovo in 2008: ICJ: Accordance with International Law of the Unilateral Declaration of Independence in Respect of Kosovo, Advisory Opinion, ICJ Reports 2010, 22 July 2010, p. 403. 664 It should be noted that the legal force of the practice of UN Bodies is relative, even though it has an indicative value of the current international tendencies as reflected by the CESCR and CERD: N. BERNAZ: op. cit., pp. 504-505. 665 O. De SCHUTTER, R. McCORQUODALE and G. SKINNER: The Third Pillar: Access to Judicial Remedies for Human Rights Violations by Transnational Businesses, December 2013 (online publication), ICAR-CORE-ECCJ, p. 88 (recommendation No. 29). 666 Under international humanitarian law, corporate liability can be argued in relation to article 75 of Rome Statue of the ICC, common art. 5 of the ICCPR and ICESCR, common article 3 of the four Geneva Conventions under certain conditions, art. 3 of the Hague Convention IV, art. 1.2 of the International Convention on the Suppression and Punishment of the Crime of Apartheid, art. 2 of the Basel Convention, and art. 10 of the UN Convention against Organised Transnational Crime. Víd.: E. MONGELARD: “Corporate civil liability for violations of international humanitarian law”, in

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Council Order 10, but “there is a risk of overemphasising the potential of international

criminal law to bring about human rights compliance among businesses and to serve as

an accountability mechanism for corporate human rights abuses”667. For instance, not all

human rights violations can be considered ‘international crimes’. Secondly, criminal

claims rely on the prosecutor’s role and, unfortunately, this is not always a good idea as

we have checked in two important French cases. In the first one, currently under

instruction, the French company then called Amesys was said to sell internet spying

software to the Libyan regime of Colonel Muammar Gaddafi. According to the

information of diverse NGOs and CSOs, this software was behind the arbitrary

detention and torture of five pro-democracy activists opposed to the regime. A claim

was brought in France but the Paris Prosecutor’s Office steadily opposed the claim and,

on several occasions, asked for its dismissal delaying the admissibility proceedings until

January 2013668. Also concerning France, a second case confirms the discussable role of

public prosecutors: one of the largest timber traders, the Danish company DLH, and

particularly its French branch, were said to import through the port of Nantes allegedly

illegal timber coming from Liberia and apparently behind the financing of Charles

Taylor’s faction in the civil war. The public prosecutor of Nantes transferred the case to

Montpellier and, after two years without any news, Montpellier’s public prosecutor

informed the plaintiffs that he would not open any preliminary inquiry669. In sum, public

prosecutors are generally unexperienced (if not unwilling) to deal with these cases

because of their complexity, sometimes their political sensitiveness, and the lack of

resources.

In view of the difficulties around criminal proceedings, civil liability should not be

neglected; in colloquial terms, there is a Spanish expression that goes “lo que les duele

International Review of the Red Cross, Vol. 88 No. 863, September 2006, pp. 665-691, at pp. 670-672 and 682. 667 J. KYRIAKAKIS: “Developments in international criminal law and the case of business involvement in international crimes”, in International Review of the Red Cross, Vol. 94 No. 887, Autumn 2012, pp. 981-1005, at pp. 988-989. 668 FÉDERATION INTERNATIONALE DES LIGUES DE DROITS DE L’HOMME: L’affaire Amesys, Paris 2014 (online publication ISSN 2225-1790), p. 7. 669 The plaintiffs were a group of NGOs and CSOs that, under French law, were recognised as entitled to make judicial claims. The French law establishes a crime of “recel”: the intermediate sell of a product which is known to be of illegal origin. Since there was no public inquiry, there are not official documents available. See the NGOs websites at: http://www.asso-sherpa.org/procedures-and-milestones-dlh-liberia#.Vf8O08sVgpY and https://www.globalwitness.org/archive/8572/.

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es el bolsillo”670. Many critics correctly claim that civil trials are not possible under

International Law. Indeed, pragmatically speaking there is no need to discuss the

criminal liability of TNCs: it is about the civil consequences of human rights breaches.

For example, most internal orders have some kind of secondary or subsidiary civil

liability when criminal offences run parallel to civil claims, in line with the Roman

adage that says “societas delinquere non potest”. Pragmatism leads us to believe that

civil claims are the most interesting option, in so far as it entails tangible remediation

measures, without rejecting eventual criminal responsibilities if individuals are

identified and the legal order at stake allows it.

In any case, civil actions are not without problems. Several polemic cases brought

before UK Courts, finally settled out of court, can give an idea on the cons of civil

claims. In two cases, South-African individuals claimed damages for mercury poisoning

when working at a factory of a wholly-owned subsidiary of an English company (Thor

Chemicals Holdings Ltd). Both cases of 1997 and 2000671 were quickly aborted with

multi-million dollar settlements and “no admission of liability” 672.

In 2009 nearly 30.000 claimants from Ivory Coast filed a suit against Trafigura Ltd. for

the alleged dumping of toxic waste, having caused related diseases among the

population living by the coast673. Once the case was declared admissible and having

started the probative phase before the English High Court674, Trafigura decided to pay

$1.500 to each alleged victim and no further inquiry was done, since civil proceedings

only function upon request by a party. The settlement, however, led to a second lawsuit

referred to the costs and delivered in 2011: according to the Judge, costs alleged by the

claimants seemed disproportionate even though an item by item assessment had to be

done, from witnesses, security, to experts, medical investigations, media and

670 An English translation would be “where it hurts, in their pockets”. I. VIVAS-TESÓN: “La implementación de los Principios Rectores ONU sobre empresas y derechos humanos en España”, in Anais dos III Congresso Iberoamericano de Direito Sanitário / II Congresso Brasileiro de Direitto Sanitário, Vol. 2 No. 2, July-December 2013, pp. 870-880, at p. 878. 671 Sithole v. Thor Chemicals Holding Ltd, [2000] A2/2000/2894 (AC), and the previous settlement, also for mercury poisoning, in Ngcobo v Thor Chemicals Holdings Ltd & Desmond Cowley of 1997. 672 C. BUGGENHOUDT and S. COLMANT: Report ASF. Justice in a Globalised Economy: A Challenge for Lawyers. Corporate Responsibility and Accountability in European Courts, Brussels 2011, Avocats Sans Frontières, pp. 10-12. 673 For a summary and comment of this case, also see: Y. FARAH: “Toward a Multi-Directional Approach to Corporate Accountability”, in S. MICHALOWSKI (Ed.): Corporate Accountability in the Context of Transitional Justice, New York 2013, Routledge Ed., pp. 27-51, at pp. 41-42. 674 The Judge was already delivering opinions on witnesses and experts: ENGLISH HIGH COURT: Yao Essaie Motto and Ors v Trafigura Ltd., [2009] EWHC 1246 (QB).

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information, lawyers retribution or even extra-territorial costs (for research in other

locations like Malta, Amsterdam, Lagos or Norway). The Judge partially recognised the

claimant’s bill, while he clarified that “it is not open to me to decide whether those

witness statements were i) admissible; and or ii) of any probative value in relation to

any of the issues in the case, since there has never been a trial”675. Again, “the

defendants settled with a denial of liability”676, but for the judge the settlement itself

“effectively prevents any argument that the proceedings should never have been brought

because they would be bound to fail”677, as the defendants argued to disallow the costs

of the alleged victims. Trafigura almost became a judicial saga because it operated from

the port of Amsterdam: a € 1 million fine was imposed to the company in the

Netherlands, considering it a “co-perpetrator” indirectly responsible and “knowing that

they [the toxic substances] are harmful to life or health”678. One year later, the Court of

Appeal confirmed the fine under the same Dutch Environmental Acts679.

The third example of settlement involves Shell activities in the Niger Delta, a very

problematic oil-producing site that has led to numerous lawsuits in different courts of

the EU and the US. In this particular case, Shell decided to compensate the alleged

victims via an extrajudicial agreement only after the Judge had delivered a preliminary

ruling on eight issues, answering that claimants were entitled to compensation in respect

of 2008 oil spills, even though spills caused by sabotage and illegal activities were not

imputable to the company680. The full trial was planned for 2015 and Shell paid £ 55

million divided as follows: £ 35 million for the individuals (aprox. £ 2,200 each, circa.

675 HIGH COURT OF JUSTICE (Queen’s Bench Division, Senior Courts Costs Office): Yao Essaie MOTTO & ORS v. Trafigura Ltd and Trafigura Beheer BV, Judgment of 15 February 2011, EWHC 90201, para. 214 ii), 4.2. 676 Ibíd., para 67. 677 Ibíd., para. 206 ii). 678 RECHTBANK AMSTERDAM (Amsterdam Court): Trafigura Beheer B.V., Case No. 13/846003-06, Judgment of 23/07/2010, para 15. Unofficial translation made with “Google Translator” tool. The judgment is only available in Dutch at: http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBAMS:2010:BN2149. 679 GERECHTSHOF AMSTERDAM (Amsterdam Court of Appeal): Trafigura Beheer B.V –Appeal, Case No. 23/003334-10, Judgment of 23 December 2011. Available (in Dutch) at: http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:GHAMS:2011:BU9237. 680 High Court of Justice (Queen’s Bench Division): The Bodo Community and Others v. The Shell Petroleum Development Company of Nigeria Limited, Judgment of 20 June 2014, EWHC 1973 (TCC), para 93 (on oil spills due to sabotage and criminal activities) and para. 151-152 and 160 (on the calculation of damages according to Nigeria’s standard of living and price of the land).

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33 times the monthly minimum wage in Nigeria), and £ 20 million for the Bodo

Community681.

Therefore, the other side of the coin of civil claims is the eventual risk of ending up in

out of court settlements that, ultimately, might shed little light on human rights

concerns, even including anti-suit clauses and non-liability declarations that the victims

have to sign to reach the agreements. At least in the EU, an arbitration agreement is not

sufficient to prevent an EU Court from hearing a case, even if the agreement includes an

anti-suit clause682, because one of the parties would be deprived of judicial protection683.

With its pros and cons, we still consider that the civil litigation looks more attractive

and practical than criminal proceedings, also following to the foregoing general

considerations on extraterritoriality and liability.

Having said this, the debate on corporate extraterritorial responsibilities can therefore be

reduced to the following question: to what extent an extraterritorial adjudicative

jurisdiction can be exercised to judge extra-contractual civil responsibilities in cases of

human rights violations by TNCs.

By way of premise, most of the problematic aspects will turn around the admissibility

criteria to exert such extraterritorial adjudicative jurisdiction and obstacles ratione

temporis can also arise because of victims’ misinformation on procedural requirements

and, even ratione materiae, to duly translate human rights issues into internal civil

681 Also see: http://www.leighday.co.uk/News/2015/January-2015/Shell-agrees-55m-compensation-deal-for-Nigeria-Del 682 “Accordingly, the use of an anti-suit injunction to prevent a court of a Member State, which normally has jurisdiction to resolve a dispute under Article 5(3) of Regulation No 44/2001, from ruling, in accordance with Article 1(2)(d) of that regulation, on the very applicability of the regulation to the dispute brought before it necessarily amounts to stripping that court of the power to rule on its own jurisdiction under Regulation No 44/2001. […] a party could avoid the proceedings merely by relying on that agreement and the applicant, which considers that the agreement is void, inoperative or incapable of being performed, would thus be barred from access to the court before which it brought proceedings under Article 5(3) of Regulation No 44/2001 and would therefore be deprived of a form of judicial protection to which it is entitled. […] [I]t is incompatible with Regulation No 44/2001 for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement.” Case C-185/07, Allianz SpA and GeneraliAssicurazioni Generali SpA v. West Tankers Inc., Judgment of 10 February 2009 (Grand Chamber), para. 28, 31 and 34 (extracted citations). 683 However, EU Courts have both possibilities: to recognise or not the validity of such anti-suit clauses. “Regulation No 44/2001 must be interpreted as not precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State, since that regulation does not govern the recognition and enforcement, in a Member State, of an arbitral award issued by an arbitral tribunal in another Member State.” Case C-536/13, Gazprom OAO v. Lietuvos Respublika, Judgment of 13 May 2015 (Grand Chamber), para. 44.

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responsibility claims. However, as said before, the hardest nuts to crack will be ratione

loci and ratione personae.

Ratione loci

Apart from the debate on extraterritoriality itself, it is not evident to reverse the general

rule that offences have to be judged in the place where they occur (lex loci delicti). The

forum non conveniens doctrine insists on the importance of the ‘natural forum’ because

access to evidence and witnesses will be easier, and it will always be difficult for a

Court to apply an alien legal order (that of the place where the violation took place),

including probably different standards for reparation if the violation is finally proved.

This doctrine generally corresponds to common law systems. Many authors defend its

usefulness to “level the playing field” and prevent “a plaintiff from compelling

litigation in a forum where the defendant will have great difficulty in obtaining evidence

vital to the defense”684. Moreover, tax payers might be reluctant to welcome the “glut of

foreign plaintiffs suing for injuries inflicted abroad”685. In our view, this reflects a rather

disproportionate concern and care of TNCs’ defence: the problems for litigation in

terms of access to evidence will be the same for alleged victims and authors if an

external forum accepts jurisdiction and, if there is any significant and usual inequality

of arms, it will rather undermine the victims. According to the famous and amusing

concurring opinion of Judge Jackson in a US case, back in 1942, he put forward the

exaggerated “protective doctrines in terms of sheltering defendants against vexatious

and harassing suits […] behind a rather fantastic fiction that a widow is harassing the

Illinois Central Railroad”686. This is the equivalent to say that, in some cases, the public

interest would prevail, which is not an uncontroversial conclusion.

A milestone to clarify this doctrine on jurisdiction ratione loci is the so-called ‘Spiliada

test’, a twofold scheme foreseen by the House of Lords (UK): firstly, the defendant has

to demonstrate that not only the UK is not a suitable forum but that there is another

684 R. J. WEINTRAUB: “Judicial Guidance of Litigation to an Appropriate Forum”, in L. PEREZNIETO CASTRO, T. TREVES and F. SEATZU (Eds.): Tradition and Innovation of Private International Law at the Beginning of the Third Millenium, New York 2006, Juris Publishing Inc., pp. 251-260, at p. 260. 685 Ibíd., p. 258. 686 US SUPREME COURT: Miles v. Illinois Central R. Co., 315 US 698 (1942), Judgment of 30 March 1942, p. 706. Available at: https://supreme.justia.com/cases/federal/us/315/698/case.html (also cited by WEINTRAUB, supra, footnote 684).

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natural and clearly more appropriate Court, notwithstanding the fact that, in the second

phase of the reasoning, the Court may declare itself competent if, “established

objectively by cogent evidence, […] the plaintiff will not obtain justice in the foreign

jurisdiction”687. This helps to handle the forum non conveniens doctrine in favour of

human rights litigations if the alleged victims succeed to show that the difficulties in the

natural forum “would amount to a denial of justice”, as in the off-cited case Lubbe v.

Cape688. This is even compatible with the sceptics view against any ‘public interest’ of

courts: it can be seen as a way to balance the private interests of the litigants so that, in

applying the ‘Spiliada test’, “questions of judicial amour propre and political interest or

responsibility have no part to play”689. The burden of proof is shared: the defendant has

to argue the suitability of another forum, but the plaintiff has the obligation to clearly

show that “substantial justice cannot be done in the appropriate forum”, to convince a

UK Court to take over –‘substantial justice’ meaning that claimants will have to accept

normal differences between legal systems, perhaps less “generous” than the British690.

As we will argue in the following section, the EU has tackled the problem ratione loci

differently; let’s note for instance that exceptions to ‘local remedies’ are not new in

687 “ […] the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. […] If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this enquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction”, HOUSE OF LORDS (UK): Spiliada Maritime Corporation v. Cansulex Ltd., Judgment of 19 November 1986, Paragraphs 6.3 and 6.6. 688 “If these proceedings were stayed in favour of the more appropriate forum in South Africa the probability is that the plaintiffs would have no means of obtaining the professional representation and the expert evidence which would be essential if these claims were to be justly decided. This would amount to a denial of justice […] at the second stage of the Spiliada test” HOUSE OF LORDS: Lubbe and Others and Cape Plc. And Related Appeals [2000] UKHL 41, Judgment of 20 July 2000 (opinions of the Lords of Appeal for Judgment), para. 28. 689 Ibíd., para. 33. 690 “he [the defendant] has to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum in which jurisdiction has been founded by the plaintiff as of right. […]This is the first stage. However, even if the court concludes at that stage that the other forum is clearly more appropriate for the trial of the action, the court may nevertheless decline to grant a stay if persuaded by the plaintiff, on whom the burden of proof then lies, that justice requires that a stay should not be granted. This is the second stage.” HOUSE OF LORDS: Connelly (A.P.) v. RTZ Corporation Plc and Others, Judgment of 24 July 1997, available at: http://www.publications.parliament.uk/pa/ld199798/ldjudgmt/jd970724/con01.htm.

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international human rights law: the non-exhaustion of domestic remedies are generally

justified if there are unreasonable delays or lack of judicial guarantees691.

While this may sound strange, forum shopping is also possible in human rights cases,

and sometimes perfectly legal and legitimate. The forum non conveniens doctrine has

been refined through the jurisprudence to evaluate and limit the best fora, especially in

common law systems, but still leaves room for human rights litigation under the

conditions explained above. To some extent, forum shopping is also a legitimate

practice for human rights litigators when, in representation of alleged victims, they have

to choose the most advantageous court, provided a choice is possible and under concrete

conditions (lis pendens, ne bis in idem, and other procedural aspects that each tribunal

lays down). Generally speaking, human rights lawyers pay little attention to the election

of the correct forum, compared to other fields of law. In the EU, there are two available

options: the European Court of Human Rights in Strasbourg (Council of Europe) or the

European Court of Justice in Luxembourg (EU), so that human rights lawyers will have

a delicate work -and many times neglected- even before starting the proceedings. In

Latin America, a case might be more suitable for the UN Committee on Human Rights

rather than the Inter-American Court of Human Rights, or even in some cases the

Special Procedures branch of the UN Human Rights Council deems to be a more

effective and practical shortcut (tough less juridical).

Ratione personae

The first problem is that of the legal personality of TNCs and the difficulty to trace a

direct or indirect causal link with alleged human rights abuses in third countries, taking

into account the complexity of business structures. In Private International Law,

“connecting factors that go beyond old-fashioned territorial limits”692 are more and

more usual, at the same time that companies are considered, to some degree, right-

holders, for example in the protection of international investments. According to the 691 To mention just a few examples, see: art. 5.2 b) of the Optional Protocol to the International Covenant on Civil and Political Rights; exceptions to art. 35 of the European Convention on Human Rights through the Strasbourg’s case law in terms of availability and effectiveness (see EUROPEAN COURT OF HUMAN RIGHTS: Practical Guide on Admissibility Criteria, Strasbourg 2011, p. 18, available at www.echr.coe.int), or art. 46.2 a), b) and c) on unreasonable delays and due process of the Inter-American Convention on Human Rights. 692 A. SANGER: “Transnational Human Rights Cases? Not in our Backyard!” in The Cambridge Law Journal, Vol. 72 No. 3, November 2013, pp. 487-490, at p. 489.

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International Court of Justice, it deems to be sometimes necessary to “prevent the

misuse of the privileges of legal personality, as in certain cases of fraud or malfeasance,

to protect third persons […] or to prevent the evasion of legal requirements or of

obligations”693. The lifting of the corporate veil might be justified in certain “special

circumstances”694, why not in the interest of internationally recognised human rights

obligations. Despite the fact that only States and International Organisations are the

primary subjects of international law, the recognition of TNCs does not mean that they

might start appointing ambassadors, but to recognise that, in fact, they should have a

“limited personality”695 within the framework of their rights in order to allow parallel

responsibilities.

Perhaps the expression ‘lifting the corporate veil’ only represents a particular facet of a

broader phenomenon in International Law: the gradual piercing of legal personality, to

which human rights have greatly contributed while gradually recognising a limited

locus standi of individuals. We have therefore to “rethink jurisdiction” in the light of

recent developments after which the “idea of jurisdiction as purely an expression of the

rights and powers of sovereign states requires reconceptualization”696. The challenges

derived from piracy, terrorism and transnational crime have International Law reeling

against the ropes. Globalisation has also led to the multiplication of asymmetric

transnational (but non-international) conflicts697, not to mention the complex human

rights issues raised by the activities of TNCs. The concept of sovereignty has always

693 INTERNATIONAL COURT OF JUSTICE: Barcelona Traction, Light and Power Company, Limited, Judgement, I.C.J. Reports 1970, p. 3, para. 56. 694 In that case, to protect shareholders: “the process of lifting the veil, being an exceptional one admitted by municipal law in respect of an institution of its own making, is equally admissible to play a similar role in international law. It follows that on the international plane also there may in principle be special circumstances which justify the lifting of the veil in the interest of shareholders”. Ibíd., para. 58. 695 F.J. ZAMORA CABOT: “Kiobel v. Royal Dutch Corp y los litigios transnacionales sobre derechos humanos”, in Working Papers ‘El tiempo de los Derechos’, No. 4 (2011), ISSN 1989-8797, pp.1-13, p. 7. 696 “This development suggests the need to rethink the idea of jurisdiction in international law. To the extent that States have agreed to individually enforceable rights for foreign investors which extend to a right of access to civil or administrative remedies […] they have apparently agreed that they owe jurisdictional obligations not only to foreign States but also to individuals. It is true that these rights may be considered as products of State consent through treaties or even (more controversially) customary international law, suggesting that the individual rights thus created can be accommodates within the existing framework of jurisdictional rules. It can nevertheless also be argued that through the recognition of individuals as positive actors and jurisdictional rights-bearers, the idea of jurisdiction as purely an expression of the rights and powers of sovereign States requires reconceptualization”. A. MILLS: “Rethinking Jurisdiction in International Law”, in The British Yearbook of International Law, Vol. 84 No. 1, 2014, pp. 187-239, at pp. 218-219. 697 See R. CALDUCH CERVERA: “Procesos de cooperación y conflicto en el sistema internacional del siglo XXI”, in J.C. PEREIRA (Coord.): Historia de las Relaciones Internacionales Contemporáneas, Madrid 2009, Ariel Ed., pp. 701-721, at pp. 709-713.

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moved between “autonomy and responsibility”698, but these developments tend to

increase the relative weight of the latter. This has to come with the understanding that

there are no self-contained regimes in International Law, as argued in the first part of

this work.

Notwithstanding the fact that it is not a consolidated doctrine yet, we rather support a

functional definition of companies –consistently with other issues in this research.

Otherwise, actions taken by apparently separate entities, distributed across associates,

subsidiaries, branches and suppliers, can be legal individually taken, but the sum of

them can amount to illegalities. In general terms, the complexity of corporate structures

are probably not deliberately designed to violate human rights699, but they reveal to be

very useful to avoid responsibilities once problems arise. In this sense, it is vital to keep

close to what happens in the field in order to test merely formal separations based on

legal personality.

We can build on the experience in the area of international taxation law and money

laundering, where there are instruments to pierce the corporate veil. There are sound

reasons to do so in a variety of international and European standards. There is a solid

ECJ’s case law that has empowered the Commission, in the area of competition law, to

extraterritorially prosecute foreign parent companies, based on “the economic unit

doctrine” and the “economic continuity test” (in cases of “succession of enterprises”) if

there are enough elements “to shift the liability to the controlling entity”700. Therefore,

in the area of competition law, the EU did not want to be the victim of merely formal

separations based on legal personality, when subsidiaries in Europe were carrying out

anti-trust activities under the orders of parent companies based outside the EU. In

human rights cases the situation is exactly the opposite as the parent company is usually

698 T. GAMMELTOFT-HANSEN and T. E. AALBERTS: “Sovereignty at Sea: The Law and Politics of saving lives in the Mare Liberum”, in Working Papers of the Danish Institute for International Studies, No. 18, Copenhagen 2010, 31 pp., at pp. 8-13. 699 For example, the figure of ‘limited liability’ was intended to promote private investors’ confidence, but not intended to make companies unaccountable, for example, after an environmental disaster, so that… “When called upon by the government to clean up the mess, the MNC announces that it is bankrupt: all of the revenues have already been paid out to shareholders. In these circumstances, MNCs are taking advantage of limited liability”, as noted by the Nobel in Economy J. STIGLITZ: “Regulating Multinational Corporations: Towards Principles of Cross-Border Legal Frameworks in a Globalised World Balancing Rights with Responsibilities”, in American University International Law Review, Vol. 23 No. 3 (2007-2008), pp. 451-558, at p. 474. 700 A comprehensive study on this case law at: B. CORTESE: “Piercing the Corporate Veil in EU Competition Law: the Parent Subsidiary Relationship and Antitrust Liability”, in B. CORTESE (Ed.): EU Competition Law. Between Public and Private Enforcement, The Netherlands 2014, Kluwer Law International, pp. 73-93, at p. 83.

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registered in the EU, but we do not see why the same reasoning would not be

applicable.

The OECD Guidelines on Multinational Enterprises acknowledge that different

enterprises operating abroad might be subject to different legislations, but “compliance

and control systems should extend where possible to these subsidiaries” and “the

board’s monitoring of governance includes continuous review of internal structures to

ensure clear lines of management accountability throughout the group”701. Formally

speaking, a subsidiary is controlled by the parent company when the latter owns more

than 50% of shares or when it has the right to appoint or remove a majority of directors

and managers, in terms of control and not only simple ownership. Control is presumed

to be extended to the subsidiaries of subsidiaries: if subsidiary B controls C, but B is

controlled by A, then the logical conclusion is that A controls C, and so on, as it

happens in complex conglomerates that characterize multinational corporations in a

generational structure702. EUROSTAT and the Seventh Directive went a step further

stating that “if nobody holds the legal power to control B, but A has effective control

over B, i.e., there is a presumption of a participating interest of A in B through the

ownership by A of 20% or more of the capital of B, and A actually exercises a dominant

influence over B, or B is managed on a unified basis by A”703, which is a functional and

more realistic approach to determine the level of power over subsidiaries and,

consequently, potential responsibilities. In fact, the main function of ‘Holding’

corporations is to control and direct groups of subsidiaries or associates (in the latter,

the parent company is supposed to have between 10% and 50% of shares), in a building

where branches are also a different form704. Besides, article 5 of the OECD Model Tax

Convention provides with a very useful definition of ‘permanent establishment’: “a

fixed place of business through which the business of an enterprise is wholly or partly

701 OECD: Guidelines of Multinational Enterprises, Text and commentary, Paris 2011, p. 22. 702 To find the internationally recognised definitions, please check the OECD Glossary (at https://stats.oecd.org/glossary/) and EUROSTAT’s concepts and definitions database: (http://ec.europa.eu/eurostat/ramon/nomenclatures/) 703 EUROSTAT (supra) and Seventh Council Directive 83/349/EEC of 13 June 1983. 704 “A branch is a wholly or jointly owned unincorporated enterprise in the host country which is one of the following: (i) a permanent establishment or office of the foreign investor; (ii) an unincorporated partnership or joint venture between the foreign direct investor and one or more third parties; (iii) land, structures (except structures owned by government entities), and /or immovable equipment and objects directly owned by a foreign resident; or (iv) mobile equipment (such as ships, aircraft, gas- or oil‑drilling rights) operating within a country, other than that of the foreign investor, for at least one year.” UNCTAD: World Investment Report. Transnational Corporations, Extractive Industries and Development, (2007), p. 245

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carried on”, including “a place of management, a branch, an office, a factory, a

workshop and a mine, an oil or gas well, a quarry or any other place of extraction of

natural resources”705, even though subsidiaries and parents may not be considered

permanent establishments of each other, as the control is exercised differently.

In conclusion, modern legal definitions of companies focus on control and power, and

not only on ownership rights. The EU has established that “control also exists when the

parent owns half or less of the voting power of an entity”, when it is proved to “govern

the financial and operating policies of the entity under a statute or an agreement”706. In

our view, such ‘agreement’ can also be tacit and demonstrated through the internal

communications, for example, if evidence can be collected on instructions and

decisions, of operative nature or on human resources, that are effectively taken by the

parent company. The EU considers that a 20% of voting power justifies a presumption

of “significant influence, unless it can be clearly demonstrated that this is not the

case”707. In this context, it seems inappropriate to be blocked by old-fashioned and

limitative formal definitions –which by the way would be inconsistent within the EU,

where a Directive to avoid double taxation and lower the tax burden of companies,

considers that a company can declare itself ‘parent’ of a ‘subsidiary’ by owning only the

10% of shares of the latter, a requirement progressively reduced (after 2007 it was the

15% and, before, the 20%)708.

The lifting of the corporate veil in human rights cases can be supported by these

international standards that increasingly accept a functional approach to complete the

picture on effective control and power, to overcome the classic limited perceptions on

‘ownership’ and ‘legal personality’. In other words, a TNC might claim its organic

independence from its subsidiaries, but it can help the human rights litigator to show the

705 OECD Model Convention with respect to taxes on income and on capital. 706 COMMISSION Regulation (EC) No. 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and the Council, Official Journal of the European Union L 320/1 of 29 November 2008, International Accounting Standard No. 27, para. 13. 707 Ibíd., International Accounting Standard 28, para. 6. Appendix A of this Regulation finally defines “subsidiary” as “an entity, including an unincorporated entity such as a partnership, that is controlled by another entity”, a completely functional perspective that goes beyond classic criteria on ownership. 708 Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, Official Journal of the European Union L 007, 13 January 2004 p. 0041-0044, art. 3.

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functional dependence in operative and economic terms709 with the goal of convincing

the courts that, ratione personae, the parent company is also liable, similarly to internal

orders where a distinction is made between intellectual and material authors of an

offence (or at least, in terms of negligence if a lack of due control –or connivance– over

the subsidiaries can be shown).

The United States’ influence

Yet the US jurisprudence is not the subject of this research, the debate on access to

justice in the area of business and human rights has for long gravitated around the

American Alien Tort Statute, with a notable influence in the European debate. It is also

a good way to conclude these premises on corporate extraterritorial responsibilities,

before detailing the current developments in the EU. Enacted during the First Congress,

in 1789, the Alien Tort Claims Act remained in a lethargic state for two centuries. It re-

emerged in 1980 on the occasion of the judgment Filartiga v. Peña Irala revealing itself

as a useful tool for transnational human rights litigation, allowing the admission of

cases on violations of ‘the law of nations’ brought by aliens against other individuals

and, in a second wave, against TNCs. The main advantages of the ATS in conjunction

with some characteristics of the US system are these710: the ‘discovery’ facilities by

which the claimants can ask for internal documents of the defendants are also available

during the admissibility phase in form of a “jurisdictional discovery”; ‘class actions’

(collective claims) are easier and, sometimes, the absence of such possibility in the

‘natural forum’ has been sufficient for a US Court to declare itself competent; many

lawyers and law-firms accept these cases pro bono, without remuneration, sometimes

only for the prestige or on “no win – no fee” basis (which in most European countries is

even forbidden, except the UK); in many cases, Courts have accepted jurisdiction

ratione personae over subsidiaries of TNCs, even when the latter had a rather slight

709 Let’s note that an entity organically dependent can also be functionally independent; this has to be studied on a case by case basis. Obviously, the complexity of TNCs makes it impossible to find standardised relationships between parents and subsidiaries, and CSR does not necessarily leads to a clear-cut centralisation: J. BASTIANUTI: “Les dynamiques organisationnelles liées à la RSE. Le cas de la relation siège-filiale”, in Revue Française de Gestion, No. 240 (2014), pp. 115-132. 710 A comprehensive summary of this advantages: M. REQUEJO ISIDRO: “Responsabilidad civil y derechos humanos en EEUU: ¿el fin del ATS?”, in Revista para el Análisis del Derecho, 3:2011, 38 pp., at pp. 8-12. This work also includes an annex with the most relevant US jurisprudence in chronological order.

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connection with the US; and finally, punitive damages are generally generous and alien

legislation and compensation schemes can be more easily disallowed.

After a few successes with significant international impact711, the US Courts have

declared themselves competent on the basis of loose ‘connecting factors’ with the US,

following the initial decisions but without examining in depth their fundaments and a bit

erratically. The ATS suffered a first limitation in Sosa v. Alvarez-Machain (2004): for

the first time, the Supreme Court of the United States dismissed a case by laying down

three new criteria to accept jurisdiction on an alleged violation of International Law

brought by an alien. It had to be “specific, universal and obligatory”712, which generated

unexpected restrictions ratione materiae.

Some conservative judges were also increasingly unease with the political dimensions

of these cases, mainly due to the respect of foreign sovereignty and, last but not least,

expressed concerns on eventual interferences of the judiciary with the Congress in

foreign affairs by accepting new causes of action when, in fact, the ATS is only a

jurisdictional tool and remains silent of substantive causes of action. Interestingly

enough, foreign policy concerns and more serious doubts ratione loci only appeared

when an Israeli filed a suit against the Libyan Arab Republic for a terrorist attack

occurred in Haifa (Israel); the Court’s expectable dismissal constituted a premonition of

more hostile views on the ATS713. The above-mentioned doctrine of forum non

conveniens gained adepts while it became clear the potential of the ATS to sue TNCs.

The controversy developed on the status of customary international law, how it is

translated into the internal US legal order (if it becomes ‘federal common law’ and its

711 For information purposes, an off-cited case is Wiwa v Royal Dutch Petroleum: a single investor’s office with only one employee in the US sufficed to declare personal jurisdiction involving the killing in Nigeria of Ogoni activists against the extractive projects (settled out of court after it was declared admissible). Also very famous and cited by all the literature is case Doe v. UNOCAL (2001), settled out of court once declared admissible, for allegations of complicity in alleged tortures and killings in a village of Burma (Myanmar), again together with the local security forces. 712 Sosa v. Alvarez Machain concerned a Mexican national who alleged kidnapping and arbitrary detention by another Mexican national, for one day, in the course of an operation –in Mexico– orchestrated by the US Drug Enforcement Administration. S. KATUOKA and M. DAILIDAITÉ: “Responsibility of Transnational Corporations for Human Rights Violations: Deficiencies of International Legal Background and Solutions Offered by National and Regional Legal Tools”, in Jurisprudence (Mikolas Romeris University), Vol. 19 No. 4, pp. 1301-1316, at p. 1307. 713 J. A. KIRSHNER: “Why is the US Abdicating the Policing of Multinational Corporations to Europe? Extraterritoriality, Sovereignty and the Alien Tort Statute”, in Berkeley Journal of International Law, Vol. 30 No. 2, pp. 259-302, at p. 272.

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consequences), alongside the debate between ‘originalist’ and ‘modernist’

interpretations of the ATS714.

As long as almost any TNC has some kind of presence in the US, the new corporate

strategy to circumvent the generally liberal ‘personal jurisdiction’ of US courts,

consisted of putting in question the admissibility ratione materiae (the subject matter),

i.e., making manifest the lack of a sufficiently consolidated international practice to

support a liability for damages against TNCs. The result is the famous Kiobel judgment

(2013), which is the second and major limitation of the ATS. In that case715, the US

Supreme Court decided to further step back and applied stricter admissibility criteria

and started to require closer connections to the US. The ATS, according to the Court,

was suddenly presumed to be non-extraterritorial, a presumption that has to be rebutted

for a case to succeed if it “touche[s] and concern[s] the territory of the United States

[…] with sufficient force”716, not being enough a mere economic presence of TNCs in

the US. Many academics have argued that Kiobel represents a fatal restriction, though

not total, of the ATS possibilities for transnational human rights litigation, while a

historicist and limitative reading of the ATS seems to prevail at the moment717. It is

important to note that, in virtue of the amicus curiae accepted in the US, the

Commission submitted a brief in Kiobel, “acknowledging the possibility of universal

714 Being drafted back in 1789, the debate has also taken the form of virtuosistic disquisitions of legal archaeology around the original and true purposes of the ATS like if the Law was a static reality. In summary, critics affirm that, unlike the situation in 1789, the current US legal order apparently does not foresee anymore the existence of international norms which are non-federal but still binding, so that jurisdiction ratione loci should also be narrowed as done in Kiobel: “The debate about the status of international law is more directly implicated by the argument that a cause of action should not be recognised for violations of international law by aliens abroad because recognising such actions would exceed the United States’ jurisdiction to prescribe. If customary international law is federal law, then it would directly pre-empt State causes of action that exceed the United States’ jurisdiction to prescribe. But if international law were not federal law, States would be free to recognise such causes of action and place the nation in breach of its international obligations”, C. M. VÁZQUEZ: “Alien Tort Claims and the Status of Customary International Law”, in The American Journal of International Law, Vol. 106 No. 3 (July 2012), pp. 531-546, at p. 546. 715 It involved again Royal Dutch Shell activities in Nigeria and, more concretely, allegations of complicity of the parent company and its Nigerian subsidiary in the violent repression of public demonstrations against the project in the Ogoni area, with the collaboration of the Nigerian police. 716 A sound state of play of the ATS in the US, including case law and compared to Europe, in: O. De SCHUTTER, R. McCORQUODALE and G. SKINNER: The Third Pillar. Access to Judicial Remedies for Human Rights Violations by Transnational Businesses, December 2013, ICAR-CORE-ECCJ, pp. 27-30 and 34-36 (for the situation in the US, citation at p. 27). 717 “una lectura historicista del ATCA, fosilizándola en el momento en que se promulgó”, F.J. ZAMORA CABOT: “Kiobel y la cuestión de la Extraterritorialidad”, in F.J. ZAMORA, J. GARCÍA CÍVICO and L. SALES PALLARÉS: La responsabilidad de las multinacionales por violaciones de derechos humanos, Madrid 2013, Ed. Defensor del Pueblo –Universidad de Alcalá, pp. 135-148, at p. 147. We want to take the occasion to warmly thank the author for his constant support and friendship and the invitation to the book presentation.

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civil jurisdiction provided it was restricted along the same lines as universal criminal

jurisdiction, including the procedural requirement of ‘exhaustion of local and

international remedies or, alternatively, the claimants’ demonstration that such remedies

are unavailable or their pursuit is futile”718, thus confirming the conclusion we reached

before as for the forum non conveniens doctrine and its balancing to avoid a denial of

justice.

Even after Kiobel, the possibility for civil claims connected to human rights violations

is still opened in the US, though under more restrictive admissibility criteria. Anyhow,

the acceptance of civil jurisdiction under certain conditions (at least ratione personae)

should not automatically mean that the applicable law changes: we understand that the

applicable civil law should remain that of the place where the harm occurred, unless it is

clearly incompatible with human rights or other basic standards. Activists usually

request the application of the civil law of the new forum, but this is likely to ‘kill the

goose that lays the golden eggs’ and give reasons to critics that wisely raise “unlawful

assertions of universal civil jurisdiction”719. The increasing reluctance in the US about

the ATS was partly caused by the less friendly administration of G.W. Bush720 and,

somehow, by a reborn traditional “US suspicion of international laws” derived from the

fact that their independence was built upon a reaffirmation of their sovereignty, while

“Europe instead relinquished sovereignty to protect democracy”721. The EU is actually

taking the baton of these developments and, as we will see in the following section, now

is relatively opened to corporate extraterritorial responsibilities.

718 U. KOHL: “Corporate Human Rights Accountability: the Objections of Western Governments to the Alien Tort Statute”, in International and Comparative Law Quarterly, Vol. 63 (July 2014), pp. 665-697, at p. 667-668. 719 P. DAVID MORA: “The Alien Tort Statute After Kiobel: the Possibility for Unlawful Assertions of Universal Civil Jurisdiction Still Remains”, in International and Comparative Law Quaterly, Vol. 63 No. 03, July 2014, pp. 699-719, at pp. 707-713. 720 For example a Presidential order granted immunity to companies operating in Irak during the occupation by the US-leaded coalition. Bush administration also pushed back the ATS in briefs submitted by the US Government in a variety of cases as amicus curiae. It can be defined as “a comprehensive attack against the ATS, reprising arguments against admitting international law into US courts for judicial imposition abroad and raising new challenges to the extraterritorial basis of the statute itself”, J. A. KIRSHNER: “Why is the US Abdicating the Policing of Multinational Corporations to Europe? Extraterritoriality, Sovereignty and the Alien Tort Statute”, in op. cit., at pp. 276-277. 721 Ibíd., pp. 292-300. (Citation at pp. 292 and 296).

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4.2.2. Current developments in the EU

In the famous Communication […] A Renewed Strategy 2011-14 for CSR722, we find the

promise to advance in the area of access to remedies and take into account the

conclusions of experts and forums. It is our understanding that allowing access to

justice and remedies in European Courts would mark an utterly significant step forward.

If there are signs of direct or indirect involvement of an EU company in a violation of

human rights in a third country, reasonable measures should be taken to facilitate

access to justice, to some extent inspired by the American Alien Tort Statute. In terms

of new instruments, there are no big innovations within the EU; in practice, however,

there are indeed very notable opportunities that it is worth explaining.

In 2006, consistently with the approach outlined in the previous section, a French Court

warned that “l’ordre public international s’oppose à ce qu’un employeur puisse se

prévaloir des règles de conflit de juridictions et de lois pour décliner la compétence des

juridictions nationales et évincer l’application de la loi française dans un différend qui

présente un rattachement avec la France et qui a été élevé par un salarié placé à son

service sans manifestation personnelle de sa volonté et employé dans des conditions

ayant méconnu sa liberté individuelle”723. The EU has found its own way to balance the

notion of ‘ordre public international’ with the necessary respect of foreign sovereignty

and natural forums, but permitting national Courts of Member States to declare

themselves competent in cases of verified risks of denial of justice724.

At a national level, we have already referred to important decisions in the UK as a

platform to transfer the ATS debate into Europe while British Courts nuanced and

limited the forum non conveniens doctrine. We have cited above the seminal Lubbe v.

Cape, where the liability of the parent company was established despite that doctrine725.

The House of Lords acknowledged that, prima facie, England was not the natural

722 COM (2011) 681 Final, of 25 October 2011. 723 COUR DE CASSATION (Chambre sociale): Case No. 1184, 10 May 2006 : https://www.courdecassation.fr/jurisprudence_2/chambre_sociale_576/arr_ecirc_8861.html Other cases and situations will be studied in the thesis. 724 A good summary of the current situation in the EU and the way it is taking over the international leadership in this subject at: J.A. KIRSHNER: “A Call for the EU to Assume Jurisdiction over Extraterritorial Corporate Human Rights Abuses”, in Northwestern Journal of International Human Rights, Vol. 13 No. 1 (2015), 26 pp., passim. 725 Also see: TWANDA MAGAISA, A.: “Suing Multinational Corporate Groups for Torts in the Wake of the Lubbe Case –A comment”, in MACMILLAN, F. (Ed.): International Corporate Law Annual (Volume II), Oxford 2003, Hart Publishing, pp. 315-322.

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forum; nevertheless, at the second stage of the so-called Spiliada test, the Court found

out that the costs of litigation and other serious difficulties for the applicants in South

Africa would lead to an unacceptable denial of justice. If the Spiliada test became a

useful tool to initially counterbalance the forum non conveniens doctrine, at the end the

ECJ has declared the incompatibility of this doctrine with the Brussels Convention726.

On the whole, the European answer has been a partial forum necessitatis, on the basic

understanding that both article 47 of the European Charter of Fundamental Rights and

article 6 of the European Convention on Human rights require access to effective

judicial remedies, in principle without excluding third country nationals727. It is,

similarly to the ATS, a possibility under development with mixed results.

Under the umbrella of art. 82 TFEU, the general applicable regime in the EU is

essentially governed by Regulation (EC) No. 44/2001 of December 22nd 2000 (the EU

consolidation of 1968 Brussels Convention), concerning jurisdiction and the recognition

and enforcement of judgements in civil and commercial maters728, provided that the

claimant is domiciled in a Member State (art. 4). In the Resolution dated 13 March 2007

on “Corporate Social Responsibility: a new partnership”, the European Parliament

referred to this Regulation and enthusiastically asked the Commission “to implement a

mechanism by which victims, including third-country nationals, can seek redress

against European companies in the national courts of the Member States” and “organise

and promote awareness campaigns and monitor the implementation of the application of

foreign direct liability according to the Brussels Convention”729. It would appear that, in

726 “Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention, would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine. […] the Brussels Convention precludes a court of a Contracting State from declining the jurisdiction conferred on it by Article 2 of that convention on the ground that a court of a non-Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State”, Case C-281/02, Owusu v. Jackson, Judgment of 1 March 2005 (Grand Chamber), para. 38 and 46. 727 S. BARIATTI: “Diritti Fondamentali e Diritto Internazionale Privato dell’Unione Europea”, in L.S. ROSSI (a cura di): La protezione dei diritti fondamentali. Carta dei diritti UE e standards internazionali (XV Convegno Bologna 10-11 Giugno 2010 Società Italiana di Diritto Internazionale), Napoli 2011, Ed. Scientifica, pp. 397-424, at pp. 414-421. 728 Brussels I Regulation (European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968), consolidated into EU Law through the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal L 012 , 16/01/2001 P. 0001 – 0023). 729 European Parliament: Resolution 2006/2133 (INI) on Corporate Social Responsibility: a new partnership, 13 March 2007, pars. 34 and 40. At: http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&reference=A6-2006-0471&language=EN#title2

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the opinion of the Parliament, Regulation (EC) No. 44/2001 would allow corporate

accountability in the Courts of Member States; legally speaking, this is a very

controversial statement.

On one side, article 60730 on the domicile of legal persons offers a wide notion

(statutory seat, central administration or principle place of business). At first sight, the

obvious difficulty is, again, to link parent and subsidiary, so that article 60 does not

seem very useful. Indeed, when the legal person is not based in the EU, the link to the

parent company is of dubious helpfulness. In Vava and Others v. Anglo American South

Africa Ltd the decisional influence and direction of Anglo American Group over its

South African subsidiary was not seen as a solid connecting factor for the English

judge: “The fact that decisions taken and policies and strategies adopted by AA plc in

England influence, indeed strongly influence, the decisions taken by AASA in South

Africa does not alter the position”731. The relationship parent-subsidiary might be

insufficient to bring a case to the EU, even in the British jurisdiction732, if we must rely

solely on article 60 of Regulation 44/2001.

It is true that we find hopeful signs too: in Chandler v. Cape Plc the judge admits that

parent companies have duties of care over subsidiaries, even if not wholly-owned, at

least “in relation to what might be called high level advice or strategy”733 and

demonstrated “that in appropriate circumstances the law may impose on a parent

730 Article 60 goes: “1. For the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its: (a) statutory seat, or (b) central administration, or (c) principal place of business. 2. For the purposes of the United Kingdom and Ireland "statutory seat" means the registered office or, where there is no such office anywhere, the place of incorporation or, where there is no such place anywhere, the place under the law of which the formation took place. 3. In order to determine whether a trust is domiciled in the Member State whose courts are seised of the matter, the court shall apply its rules of private international law.” At “Brussels I Regulation” (European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968), consolidated into EU Law through the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal L 012 , 16/01/2001 P. 0001 – 0023). 731 HIGH COURT OF JUSTICE (Queen’s Bench Division): Vava and Others v. Anglo American South Africa Limited –Appeal, Judgment of 24 July 2013, EWHC 2131(QB), para. 72. 732 The claimants tried to link parent and subsidiary unsuccessfully: “The article is not simply about where an entity's central administration is; it is about the entity having its central administration in a jurisdiction. Just as the other limbs of article 60(1) are about where the entity has its statutory seat or the entity principally conducts business, article 60(1)(b) is about where it carries out functions, not about where others carry out functions that affect it. […] it is not difficult to envisage circumstances in which an entity's entrepreneurial decisions are determined predominantly by the wishes of a bank or other institution on which it relies for its financial survival, but it could not, I think, really be suggested that it has its central administration where the bank or institution takes decisions.”, Ibíd., para. 71. 733 HIGH COURT OF JUSTICE (Court of Appeal, Queen’s Bench Division): David Brian Chandler v Cape Plc (Appelant), Judgment of 25 April 2012, EWCA Civ 525, para. 66.

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company responsibility for the health and safety of its subsidiary’s employees”734,

including harms occurred abroad as in the case at stake, given that the “evidence shows

that the parent company has a practice of intervening in the trading operations of the

subsidiary, for example, production and funding issues”735. This is by the way perfectly

coherent with our functional understanding of transnational business structures.

In Regulation 44/2001, there is no link based on the objet or content of the litigious,

regardless of the domicile of the parties and its current interpretation is still unclear. If it

is a collective claim or there is a number of defendants, article 6.1 of Reg. 44/2001

foresees that the domicile of one of them would be sufficient to sue in that Member

State, when there is a clear link concerning the content of the process in order to “avoid

the risk of irreconcilable judgements resulting from separate proceedings”.

Critics allege that Brussels Convention is only applicable between Member States, but it

has become clear that, as a starting point, the fundamental article 2 was clearly though

to regulate “relationships between the courts of a single Contracting State and those of a

non-Contracting State, rather than relationships between the courts of a number of

Contracting States”, as explained by the ECJ in Owusu v. Jackson736. With this in mind,

we understand that the ECJ has justified joint hearings when “there is a connection of

such kind that it is expedient to determine those actions together”737, in line with article

6.1, and there is no need for the claims to have identical legal bases so that national

courts will enjoy a interesting room for manoeuvre. The forum necessitatis doctrine,

useful to avoid both denials of justice or irreconcilable judgments, has been upheld in

two occasions by Dutch Courts, who explicitly put forward Member States’ margin of

appreciation under article 4.1 of Reg. 4/2001: “In part in view of article 4(1) of the

Brussels Regulation, this means that the question regarding whether the court has

international jurisdiction in respect of SPDC [the Nigerian subsidiary of Royal Dutch

734 Ibíd., para. 88. 735 Ibíd. However, the judge felt very uncomfortable with the idea of piercing the corporate veil, insisted on the fact that the companies are separate entities and that on a case by case basis it should be shown that, specifically dealing with one problem, the parent company had a direct implication or duty: “I would emphatically reject any suggestion that this court is in any way concerned with what is usually referred to as piercing the corporate veil. A subsidiary and its company are separate entities. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiary's employees.” Ibíd., para 69 and 70. 736 Case C-281/02, Owusu v. Jackson, Judgment of 1 March 2005 (Grand Chamber), para. 35. 737 Case C-98/06, Freeport plc v. Olle Arnoldsson, Judgment of 11 October 2007, para. 39.

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Shell]should be answered based on the Dutch Code of Civil Procedure”738. In that case,

the Court adopted a progressive stance by accepting that “the corporate veil in group

relationships may be directly or indirectly pierced, albeit under exceptional

circumstances”739 and finally concluded that the claimants succeeded to prove “a

connection to such an extent that reasons of efficiency justify a joint hearing of the

claims against RDS and SPDC”740. On a later occasion affecting the same company,

sued by a different plaintiff, a joint hearing of the parent company and the Nigeria-

based subsidiary was granted without any fear of “abuse of process”741. It must be noted

as well that the same arguments were used to dismiss a third case against Shell in the

Netherlands, because the District Court of the Hague was not convinced of the

allegations of ‘negligence’ and considered that there was no concurrence of the

“exceptional circumstances”742 necessary, as said before, even citing Lord Goff of

Chieveley –the leading judge in the above-cited Spiliada case.

This interpretation of articles 2, 4 and 6 of Reg. 44/2001 finds further support in a

British case, where the domicile in England of the parent company was sufficient for the

judge to issue a worldwide injunction to freeze assets of the parent company as “there

was a real risk that Monterrico would not retain assets within the jurisdiction sufficient

to meet any claim against it or Rio Blanco”743, being the latter its subsidiary registered

in Peru and thus confirming the subsidiary civil liability of the parent company.

Moreover, we shall highlight that the British judge justified its jurisdiction ratione

personae citing the interpretation of article 2 of Regulation 44/2001 made by the ECJ’s

in above-mentioned case Owusu v. Jackson744. In spite of all these promising

developments, there are also some setbacks. For example, in a different case the ECJ

decided that “Article 6(1) of Regulation No 44/2001 must be interpreted as meaning

that it is not intended to apply to defendants who are not domiciled in another Member

738 RECHTBANK DEN HAAG (Court of The Hague): Plaintiffs 1 and 2 (Oruma) and Vereniging Milieudefendie v. Royal Dutch Shell and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 December 2009, Case No. 330891/HA ZA 09-579, para. 3.4. 739 Ibíd., para. 3.3. 740 Ibíd., para. 3.6. 741 RECHTBANK DEN HAAG (District Court of the Hague): Friday Alfred AKPAN (Ikot Ada Udo) and Vereniging Milieudefensie v. Royal Dutch Shell Plc and Shell Petroleum Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/337050/HA ZA 09-1580, para. 4.1. 742 RECHTBANK DEN HAAG (District Court of The Hague): Fidelis Ayoro OGURU and Alali EFANGA (Oruma) v. Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/330891/HA ZA 09-0579, para 4.53. 743 HIGH COURT OF JUSTICE (Queen’s Bench Division): Guerrero and Others v. Monterrico Metals Plc and Rio Blanco Copper SA, Judgment of 16 October 2009, EWHC 2475 (QB), para 28. 744 Ibíd., para. 23.

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State, in the case where they are sued in proceedings brought against several defendants,

some of whom are also persons domiciles in the European Union”745, inconsistently the

increasing case-law commented above.

In sum, the interpretation of Reg. 44/2001 shows some possibilities for transnational

human rights litigation even though its interpretation is unclear at some points. On the

other hand, since human rights breaches would basically lead to extra-contractual civil

responsibilities, the above-mentioned regulation has to be read together with Reg.

864/2007 (Rome II746): though being separate and having different purposes, the ECJ

has clarified that consistency between both regulations should be ensured747. Rome II

clearly settles that the law applicable is that of the country where the harm occurs (art.

4) as a general rule, but this is not an impediment to accept jurisdiction in case of risks

of denial of justice or irreconcilable judgments, if the Court applies the foreign law at

stake: as we explained before, the civil corollary of applying the law of the new forum

could lead to an “unlawful assertion of universal civil jurisdiction”748 and might

undermine the defendants’ fundamental rights. In general terms, we insist that accepting

jurisdiction should not lead to a change on the applicable law, unless it is clearly

incompatible with human rights or basic judicial guarantees.

In fact, art. 5.3 of Reg. 44/2001 also enshrines the general rule that the law applicable is

that of the place where the harmful event occurred. But the ECJ –contributing to the

general confusion– has established that article 5.3 of Reg. 44/2001 “must be understood

as being intended to cover both the place where the damage occurred and the place of

the event giving rise to it, with the result that the defendant may be sued, at the option

of the claimant, in the courts of either of those places”749. This should be valid also

745 Case C-645/11, Land Berlin v. Ellen Mirjam Sapir et al., Judgment of 11 April 2013, para. 56. 746 REGULATION (EC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL, of 11 July 2007, on the law applicable to non-contractual obligations (Rome II), Official Journal L-199/40 of 31/07/2007. 747 Despite being a difficult equilibrium, which becomes manifest in the following writing style: “It must be stated next that, although it is apparent from recital 7 in the preamble to Regulation No. 864/2007 that the European Union legislature sought to ensure consistency between Regulation No. 44/2001, on the one hand, and the substantive scope and the provisions of Regulation No. 864/2007, on the other, that does not mean, however, that the provisions of Regulation No. 44/2001 must for that reason be interpreted in the light of the provisions of Regulation No. 864/2007. The objective of consistency cannot, in any event, lead to the provisions of Regulation No. 44/2001 being interpreted in a manner which is unconnected to the scheme and objectives pursued by that regulation”. Case C-45/13, Andreas Klainz v. Pantherwerke AG, Judgment of 16 January 2014, para. 20. 748 See supra, footnote 719. 749 The Court was probably not thinking of transnational human rights litigation. Case C-45/13, Andreas Klainz v. Pantherwerke AG, Judgment of 16 January 2014, para. 23.

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when one of these places is not a Contracting State, in view of the interpretation of

article 2 made at Owusu v Jackson. Besides, in cases of environmental damage, even

Rome II provides that the claimant can “base his or her claim on the law of the country

in which the event giving rise to the damage occurred” (art. 7). The exact meaning of

‘giving rise’ and the situations to which it could be applied remains obscure: could it be

extended to the operative decisions taken in the headquarters of TNCs that ‘give rise to’

eventual human rights violations in the field? Are human rights “overriding mandatory

provisions” in accordance to article 16 of Rome II? Or perhaps human rights, as a

common interest of the international society, might fit into article 26 referred to the

“ordre public of the forum”? It is commonplace that the damages usually don’t take

place in Europe, but the “place of the event giving rise to it” might constitute a

possibility to show a link with EU-based parent companies, to be added to other

opportunity niches in the current regulations. For example, article 7 of Rome II is an

open window that many authors wish to see extended to cases beyond ‘environmental

damages’750.

To cite a more recent norm, the domicile of the defendant is still a key requirement in

Regulation (EU) 1215/2012, in force since 10 January 2015. It could be argued that this

territorial link should decline in exceptional circumstances, such as in cases of human

rights violations. We might recall that the Commission in 2010 had a more ambitious

proposal to improve this regulation751, even though a general rule on “related actions” to

allow extraterritorial accountability of European companies wasn’t either considered,

not even in exceptional terms in cases of human rights violations. All in all, the recast

regulation 1215/2012 maintained the territorial link based on the domicile of the

defendant, but in the overall respected and preserved a good amount of flexibility at the

level of Member States and their own margin of manoeuvre, which is a strange option

to the extent the European integration heads to uniformity and harmonisation. Perhaps

the lack of political will and consensus is behind these mixed results and the discreet

and ambiguous role of the Commission. Whatever the case may be, we have seen that

there are interesting examples of this margin of appreciation that show a certain

750 V. VAN DEN EECKHOUT: “Corporate Human Rights Violations and Private International Law. The Hinge Function and Conductivity of PIL in Implementing Human Rights in Civil Proceedings in Europe: A Facilitating Role for PIL or PIL as a Complicating Factor?”, in Contemporary Readings in Law and Social Justice, Vol. 4 No. 2 (2012), pp. 178-207, at p. 194. 751 COM (2010) 748 Final.

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potential for transnational human rights litigation, with the leading role of British and

Dutch courts.

It is early to know to what extent the margin of member States will be sufficient to cope

with the deficiencies of Regulations 44/01 and 1215/2012 with respect to the direct or

indirect involvement of EU companies in human rights violations in third countries. A

different option would be to increase the relative weight of Reg. 864/2007 to

counterbalance some unclear aspects of Reg. 44/2001. A case by case and a State by

State scenario is, in our view, unlikely to create solid bases and, sooner or later, a

revision will be necessary at the EU level (and well beyond a simple amendment). For

different reasons, it doesn’t seem realistic to expect a modification in the near future. In

addition to the technical difficulties, to accept new jurisdiction criteria (something like a

“related action” connection to sue in European Courts) clearly requires a wider political

will to support civil suits for human rights violations even when the facts occur in third

countries or when there is not a person involved with a clear European connection.

Finally, the obligation to provide with free legal assistance if necessary, as a

fundamental tool to ensure an effective access to justice, derives from the European

Convention on Human Rights. The Convention does not explicitly envisage it in civil

proceedings; but the ECHR has clarified that under article 6.1 of the treaty it can be

considered as an element of the right to a fair trial, very particularly when exceptional

circumstances arise becoming evident a high risk of inequality of arms between the

parties in inter partes proceedings. In the case Steel and Morris v. The United Kingdom,

the European Court Of Human Rights stated that “the denial of legal aid to the

applicants deprived them of the opportunity to present their case effectively before the

Courts and contributed to an unacceptable inequality of arms” which in turn may lead to

the violation of substantial human rights such as, in that case, freedom of expression in

terms of proportionality: “If, however, a State decides to provide such a remedy to a

corporate body, it is essential in order to safeguard the countervailing interests in free

expression and open debate, that a measure of legal aid rendered the defamation

proceedings unfair, in breach of art. 6.1. The inequality of arms and the difficulties

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under which the applicants laboured are also significant in assessing the proportionality

of the interference under Article 10” (and we presume that many other articles). 752

Also the Charter of Fundamental Rights of the European Union, in its article 47.3 states

that “legal aid shall be made available to those who lack sufficient resources in so far as

such aid is necessary to ensure effective access to justice”. The question is the practical

degree of coverage: the aspects covered and if it is a right of any person trying to file a

lawsuit in the territory of the EU regardless of his or her nationality and domicile.

Directive 2003/8/EC to improve access to justice in cross-border disputes by

establishing minimum common rules relating to legal aid for such disputes753 could help

us answering these questions. There was no doubt for all Union citizens and third-

country nationals who habitually and lawfully reside in a Member State (recital 13 of

the Directive) and, to comply with non-discrimination principle, article 4 provides that

any member State will offer this legal aid to any Union citizen or third-country national

with domicile in another member State. This condition significantly reduces the

possibilities to sue, even more when it is not clear if the requirement is fulfilled once an

application of legal residency is filed or only when it is approved. In sum, it is not a

useful tool for our purpose as it is aimed at clarifying the right of Union citizen or third-

country national legally domiciled to have access to legal aid in any member State

different from that of his residence or nationality.

This solves many problems inside Europe, but doesn’t give an answer to our question to

the extent the situations involving third States as scenario of the dispute or origin of at

least one of the parties in the proceeding. The two Hague Conventions, that is, first of

all Convention II (March 1954) 754 on civil procedure and Convention XXIX (25

October 1980) on international access to justice basically obliges to provide in this

regard the same national treatment to nationals of any of the parties to the Treaty.

Convention XXIX of 1980 develops this idea and requires nationals of contracting

States and persons habitually resident in a contracting State to be treated, for the

purposes of legal aid in court proceedings in each contracting State, as if they were 752 ECHR: Steel and Morris v. The United Kingdom, Case 68416/01, 15 February 2005 (Final 15 May 2005), par. 72 and 95. In the same direction see the Case Airey v. Ireland A32/1979 which also started to extend free legal aid to civil cases (in the case of an indigent). 753 COUNCIL DIRECTIVE 2002/8/EC of 27 January 2003, accessible at http://eur-lex.europa.eu/legal-content/en/ALL/;ELX_SESSIONID=1tnZJRCG7TQTQH98bM0vwbKFny1Tzv2RQjXZYtNvPSN7Q66TjR2w!-1249367065?uri=CELEX:32003L0008 , Recital 13 read together with articles 1 and 4. 754 Ratified by Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxemboug, the Netherlands, Portual, Sain and Sweden.

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nationals of and resident in that State. The Commission therefore indicated that it was

highly desirable to extend the ratification of 1980 Hague Convention755 in order to

advance in the solution of the problem and a proposal for Recommendation was

drafted756. Well accepted by the European Parliament and by the Economic and Social

Committee, it didn’t convince the Council of member States: the public debate focused

on the extent to which non-European citizens would benefit much more than Union

citizens from the treaty. The accession to 1980 Hague Convention on international

access to justice might seem a good shortcut but is actually, in the light of our

explanation, just a quick political fix without expectations of long-term success because

of the technical problems. To sum up757, the regulation of access to justice by the

Directive 2003/8/EC has two remaining loopholes: a) the eligibility criteria ratione

personae and substantive admissibility, still unclear for third countries (we are far from

some kind of “alien tort statute”); b) and secondly, article 3 of this Directive completely

forgets legal persons.

The Commission has somehow understood that we may dare expanding the traditional

mould of admissibility criteria, among which we should reach a new balance in cases of

human rights violations. This way, we would give better protection to the weaker party

in these processes, especially when local judicial systems show structural deficiencies

and, of course, provided there is a direct or indirect involvement of an EU-based

Company. This is a logical a measure in a world of increasingly integrated economies

and communications, but requires a clear political will. The EU has the opportunity to

show the way and part of the work concerning access to justice (detecting the main

issues at stake) is done. For the time being, the European initiatives in this regard have

been shy but, as we have seen, the EU has discreetly preserved a sufficient margin of

appreciation to allow Member States to go further.

755 To see the updated status of signatures and ratifications: http://www.hcch.net/index_en.php?act=conventions.status&cid=91 756 COM (86) 610 Final, of 13 November 1986. 757 This paragraph is based on the interesting analysis of shortfalls and possible improvements at: M. REQUEJO ISIDRO: “Access to remedy: abusos contra derechos humanos en terceros Estados, ¿Justicia civil en Europa?”, in F.J. ZAMORA, J. GARCÍA CÍVICO and L. SALES PALLARDÉS (Eds.): op. cit., pp. 79-107.

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4.3. The role of the EU and the post-2015 agenda

Taking into consideration this specific analysis of CSR in the EU, it is clear that its

contents are still under development. CSR grows somehow disorderly for different

reasons: first, the interaction between EU institutions, since the Parliament, the Council

and the Commission have different priorities and working methods; because Member

States themselves show diverse understandings and speeds; and because it has spread to

different policies and law-fields, apparently without a logical storyline behind –we

mean, hardly predictable –with good progresses alongside failures or omissions.

Besides, we face a complex mix of hard and soft law, the question of access to remedies

is still pending as well as its future interaction with classical human rights instruments.

Only time will tell how the traditional ex-post and vertical human rights mechanisms

can be completed by CSR, defined as a mostly ex-ante (preventive) and horizontal

approach758. We started this research raising questions such as: What are the differences

and similarities between the EU and other international organisations in promoting

CSR? How has operated the interaction between them? To what extent the EU leads the

way and in which aspects? What have been its successes and deficiencies, to evaluate its

potential leadership in the international scenario? Since when and how is CSR inserted

into EU policies? Could we make emerge CSR issues before it was labelled as such?

Are there original aspects in the European CSR? What is the legal value of the diverse

initiatives? In short, the five W’s of CSR, as a journalist would say: who, what, where,

when and why, and of course, how –which is a transversal question.

We have answered most of these questions au fur et à mesure. Provided certain caution

and criticism advisable in any research, we do not find justified the excessive fears with

regard to soft methods to complement the human rights regime: shall we recall, for

example, that in the CFSP “si può tranquillamente affermare, ad esemplio, che il

contributo alla pace dato dalla Comunità europea con i suoi mezi “soft” ed indiretti è

stato molto più importante di quello dato sin qui dall’Unione con i suoi strumenti diretti

di politica estera e militare”759. The following concluding remarks are aimed at tying

up some loose ends on the role of the EU in promoting CSR. We divide it into two

758 See Chapter I (Section 3) for our discussion on the emergence and definition of CSR. 759 L.S. ROSSI: “L’Unione Europea”, in L.S. ROSSI (a cura di): Le Organizzazioni Internazionali come Strumenti di Governo Multilaterale, Milano 2006, Giuffrè Ed., pp. 9-48, at p. 41.

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different categories: institutional aspects that mark its development, and substantive

contributions that might shed light on its potential.

4.3.1. The role of the EU: some institutional remarks

As for the general principles and broad spectrum initiatives, it is evident that the first

achievements fall on international organisations with universal scope (first part of this

research). It seems in some measure (and for instance) that the EU has followed the path

set out by those other organisations at a universal level and has, later, tried to lead the

way with mixed results. The European strategy is explicitly built upon the OECD

Guidelines for Multinational Enterprises, the UN Guiding Principles, the eight core ILO

conventions, and the ISO 26000, which remain the most important references. The EU

readily acknowledges this inspiration but the Commission is keen to clarify that “[t] he

EU role here does not duplicate the role of the UN Working Group or other existing

mechanisms”760.

Indeed, the EU is a unique organisation in the international scenario so that, intuitively,

there must be institutional particularities with an influence on the development of CSR.

The high degree of integration, now both economic and political, renders it more and

more difficult to reach the equilibrium between a market-oriented and a rights-based

Europe. CSR is somewhere in between. To the equation we have to add the hackneyed

discussion on legitimate, democratic but efficient institutions. As we have seen, since

2000 the EU institutions have embraced the so-called new modes of governance, a soft-

law fashion extended to many other policy areas after the entry into force of the Treaty

of Lisbon in 2009. Analytically and institutionally, the discussion hereafter refers to a

variety of debates and subjects concerning the EU institutional building: at first sight,

some might seem off-topic, but all have an impact on the way in which CSR has been

developed, starting with an analysis of governance issues to continue with the complex

interaction between the Commission, the Parliament, the Council and the ECJ.

We have already signalled the pros and cons of soft law, in relation to CSR; soft law,

however, has an institutional dimension: the current informal modes of governance. It

760 SWD (2015) 144 Final, 14 July 2015, on Implementing the UN Guiding Principles on Business and Human Rights –State of Play, p. 6.

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goes without saying that almost any kind of informal governance has been put in

practice during the initial implementation of the CSR agenda, to supposedly increase the

efficiency and democratic character of the institutions’ work. The alleged greater

transparency and inclusiveness of the decision-making process has to be nuanced:

nobody would be against hearing a myriad of stakeholders, but criteria on their variable

selection are loose and obscure; no one would deny the political helpfulness of more

flexible or even amorphous structures for negotiations but, as a consequence, we face

more uncertain and unpredictable outcomes. The process can actually become slower,

more expensive and even “reduce the quality of the decisions by driving those decisions

to those that are the lowest common denominator”761. As with soft law, a particular

product of informal governance, we already stated that problems are not the tools but

the way they are used, the guarantees to ensure that these “devices” are effectively open

and inclusive762.

We might also argue that human rights precisely constitute an area in which the need of

uniformity tends to discourage the adoption of informal modes of governance. After all,

if we are speaking about democratic institutions and fundamental rights, we would all

agree that they should be effective with the existing mechanisms, even in their

complicated interaction with business activities. What are then the reasons for the

success –or at least, growth– of these new informal governance schemes behind CSR?

Three law-making changes have simultaneously developed in the EU: a horizontal

bureaucratisation, a vertical Europeanisation and a lateral privatisation, which all

together create a “3D governance space” 763 in such a way that the EU is somewhere in

between with the potential of intervening in the three dimensions. This evolution has led

to a “complex [that] may work more effectively, while still bestowing mediated

legitimacy, by casting a hierarchical shadow over more (though never fully)

autonomous lawmakers, instead of trying to steer them too heavily or too directly, for

761 B. GUY PETERS: “Forms of Informal Governance: searching for efficiency and democracy”, in T. CHRISTIANSEN and T. LARSON (Eds.): The Role of Committees in the Policy-Process of the European Union. Legislation, Implementation and Deliberation, Cheltenham (UK) – Northampton (USA) 2007, Edward Elgar Ed., pp. 39-63, at p. 45. 762 This confirms the need of looking not only at formal aspects, but also at the material practice: “Hence, again we need to examine the consequences of informality, both empirical and normative, rather carefully”. Ibíd., p. 60. 763 J. CORKIN: “Constitutionalism in 3D: Mapping and Legitimating Our Lawmaking Underworld”, in European Law Journal, Vol. 19 No. 5 (September 2013), pp. 636-661, passim.

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which it anyway lacks the capacity”764. Being perhaps disappointing, in view of the

challenges of globalisation and the factual power of MNCs, it is utterly important to

realise this lack of capacity to defend human rights with traditional hard moulds in

some cases, and rather take a pragmatic approach to work proactively and take the most

of the available opportunities to influence on the new global order in defence of human

rights. This does not mean to relinquish other mechanisms for the protection of human

rights.

The EU seems to have taken up this institutional role, abandoning positivist and

theoretic fears on the procedures followed, despite the obvious risks that refer to

democracy, legitimacy, inclusiveness and participation.

We are far from reinventing the wheel concerning governance; we will only draw

attention to the usual misunderstanding that semantically links it to types of government

when, in fact, it has more to do with forms of policy making or exercising power. The

study of CSR reveals linkages between public governance and corporate governance,

which according to us have an unavoidable human rights component. In this sense we

dare to propose a rather simple but pragmatic definition of governance: ‘the behavioural

and procedural aspects of the institutional exercise of power, public or private, allegedly

based on selected ethical values of the Community at stake’. In this way, we include the

public and private dimensions, the human rights core ingredients and motivations, and

the fact that CSR predominantly consists of practices (behaviours and procedures) to

prevent human rights abuses.

As it happens with soft law, it is difficult to take a scientific stance on to what extent

informal governance exclusively responds to neo-liberal wishes or, to a certain extent,

also to other factors like a historical elitist inertia in the European integration project

(when doubts appear as to the degree of inclusiveness of decision-making processes). In

this respect we warn on the usual confusion between political accountability and legal

responsibility, very frequently mixed up for ideological purposes. The Commission

herself makes an ambiguous mishmash of ex-ante and ex-post responsibilities

“tend[ing] to blur accountability with issues of representative deliberation”765.

Paradoxically, it is the success of the EU that has led to its increasing and

764 Ibíd., p. 658. 765 M. BOVENS: “Analysing and Assessing Accountability: A Conceptual Framework”, in European Law Review, Vol. 13 No. 4 (July 2007), pp. 447-468, at p. 453.

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unprecedented administratisation. This takes us to the borders of the treaties: articles

288 and 290 TFEU establish an apparently clear-cut distinction between legislative and

non-legislative acts, their respective legal effects and the delegation of powers to the

Commission, but they insufficiently address the operational tasks that need to be

accomplished to deal with this increasingly specialised EU administration.

In a very interesting precedent-setting case, precisely related to the cooperation in the

social field (employment and working conditions) and migration policies, the ECJ

clearly distinguished between competences and powers: while it declared void a

Commission initiative to initiate a consultation procedure on migration policies because

it lacked competences, it nevertheless dismissed the application of various Member

States worried about the leading role and organisational tasks of the Commission in

other social issues when it decides to start a consultation process (so usual in CSR). The

ECJ strongly emphasised that “where an article of the EEC Treaty –in this case Article

118– confers a specific task on the Commission it must be accepted, if that provision is

not to be rendered wholly ineffective, that it confers on the Commission necessarily and

per se the powers which are indispensable in order to carry out that task”766. The

understandable fear of Member States as to the level of actual influence of the

Commission found no legal support but, as early as 1987, anticipated the problem of the

relative power of the Commission only by coordinating consultations, despite the fact

that, of course, it could not be proved to what extent the Commission would inform the

final outcome, as it happens with soft law, soft governance and CSR. In other words, the

informal but real power derived from the institutional role of the Commission, though

merely procedural, does not seem a juridifyable matter for the Court, naively

concluding that “[s]ince the Commission has a power of a purely procedural nature to

initiate a consultation procedure it cannot determine the result to be achieved in that

consultation”767.

We insist that this administrative growth is the result of a relative success of the EU,

even though it is a ‘double-edged sword’. Its combination with new governance modes

has generated a plurality of networks and agencies and other bodies in such a way that,

in no small measure, it develops into a soft administratisation. Informal governance

766 Joined Cases 281, 283 to 285 and 287/85, Germany, France, Netherlands, Denmark and United Kingdom v. Commission, Judgement of 9 July 1987, para 28. 767 Ibíd., para. 34.

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makes it easier to operationalise the increasing administrative needs of the EU, not

bearable anymore by the Commission on her own because of their number, specificity

and technical character. In sum, informal governance softens but allows the deepening

of market integration up to ever higher levels that need a proper administration.

CSR has to be contextualised in the wider framework of market integration.

‘Responsible’ market integration has therefore to combine merely economic regulation

with CSR-informed governance, in a relatively flexible manner that facilitates getting

closer to an “ecosocial market economy”, in the words of Mrs. Ferrero-Waldner,

European Commissioner for External Relations back in 2007768. Truly strict

interpretation of the treaties would be likely to impede certain levels of harmonisation

of the internal markets, partially achieved through soft law and new governance forms,

most prominent among which are also agencies and networks. The enlargement

eastwards has also had an influence since the negotiations in Brussels become tougher,

making soft harmonisation more attractive. The Commission thus circumvents legal

limits to its competences, as regards implementation, and has taken the opportunity to

go beyond in certain policies –like CSR–, through soft strategies in view of the lack of

proper powers under the treaties. Another example are EU networks of regulators with

more or less informal characteristics: “lacking the legal instruments to coordinate

policies in certain sectors, the Commission would primarily attempt to indirectly expand

the range of issues that fall under supranational competences by coordinating networks

of regulators”769. In the area of CSR, this can explain the emphasis of the Commission

in apparently grey ‘coordination tasks’ that we defined as ‘information and promotion

strategies’770. These information and promotion strategies bring the occasion to gather

with and influence public and private regulators: informal peer reviews with Member

States or other national authorities, along with private-led organisations with standard-

setting vocation and companies themselves.

Certainly, CSR has interwoven a great number of stakeholders and specialists,

allocating funds for research and policy papers. We have cited a number of reports and 768 Cited by: V. BACHMANN and J.D. SIDAWAY: “Zivilmacht Europa: A Critical Geopolitics of the European Union as a Global Power”, in Transactions of the Institute of British Geographers, New Series, Vol. 34 No. 1 (January 2009), pp. 94-109, at p. 103. 769 Moreover, the Commission profits from the fact that Member States have already delegated powers to their respective national institutions and, later, the Commission informally coordinates them with a clear influence on the outputs. M. ZINZANI: Market Integration through Network Governance: the Role of the European Agencies and Networks of Regulators, Cambridge 2012, Intersentia Ed., p. 25. 770 Refer to Chapter III, Section 2.1.

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studies on different aspects of CSR, in which the external influence of ‘stakeholders’

and ‘experts’ is sometimes direct, as when the study is produced by external institutions

like the University of Edinburgh (the Study of the Legal Framework on Human Rights

and the Environment Applicable to European Enterprises Operating outside the

European Union) or Commission’s study on Responsible Supply Chains, tasked to a

group of research projects under a services contract for the High Level Group on

Corporate Social Responsibility. In some other cases, the external influence is indirect

and less easy to be traced such as the meetings and networking events that precede, for

example, the sectoral CSR handbooks published by the Commission. In sum, we have

mentioned reports, strategies, frameworks and guidelines, being the most important the

Renewed EU Strategy for 2011-2014.

These documents were not without consequences, as we have seen a partial –at times

audacious- implementation. We have even shown its permeation into proper EU Law.

From the companies’ perspective, it starts to be risky to turn a blind eye to this incipient

regulatory scenario and the future agenda. In this sense, we have observed that the

Commission has moved from a framework phase to a more strategic and active phase

after 2009. Precisely at this step it is necessary to wonder on the share of external

influences. It appears almost impossible to gauge the real impact of stakeholders,

experts and other informal actors about whom doubts persist in terms of legitimacy,

conflict of interests, and supervision.

It must be said that this institutional modus operandi is not limited to CSR; it reflects by

the way a wider political dynamic in the EU. Recourse to experts and the agencification

of the EU are explained by the above-mentioned specialised administrative tasks that

the Commission no longer performs due to its number and technical character. This

research is not centred on this particular phenomenon, although it deserves –en passant–

a short comment since experts and other unknown actors have contributed to shape CSR

in the EU. CSR is also, in part, the result of this cumulative technocratic

administratisation of the EU, based on the passivity of Member States –rather than an

active support: a “permissive consensus” or a “seductive formula of political

abdication”771. The legal responsibility, in cases of breach of the treaties, is likely to fall

771 M. EVERSON: “The European System of Financial Supervision: a Technology of Expertise”, in M. AMBRUS, K. ARTS, E. HEY and H. RAULUS: The Role of ‘Experts’ in International and European

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on the Commission as the most usual formal decision-maker; nevertheless, the political

accountability will be vaguer and vaguer. Challenges will be insurmountable for social

scientists eager to contextualise their researches in “their socio-economic terrains, [as]

we risk not seeing how those who supposedly influence policies (experts) are

themselves also influenced by material, ideational and institutional considerations”772.

The objective is not to discuss the expertise of experts or the representativity of

particular stakeholders, but to remain critical in terms of, respectively, their alleged

scientific neutrality or full inclusiveness: the EU should establish some kind of

“legitimacy test”773 or double-check procedure or administrative filter, even more

important taking into account the international influence of the EU when it officially

takes a stand.

If we may be allowed to incur a short philosophical excursus, it is our personal opinion

that soft governance, manifesting itself in the form of soft norms, with the concrete

example of CSR, all shall be the materialisation of changing mentalities, a process that

will have to be confirmed in the longue durée, in the words of the French historian

Braudel. We have already cited another French thinker, Foucault, to warn on the

discourses of truth and its political management774. The multiplication of experts, the

super-specialisation, and their institutional reflection (bodies, agencies,

multistakeholder forums, etc.) respond, in our view, to a general crisis of legitimacies.

The end of the Cold War and the progressive achievements of welfare states have led to

a partial de-politicisation of western societies. Postmodernism is also behind the

questioning of almost any source of legitimacy, in particular in the political scene. Even

democracy is suffering this crisis of legitimacies in the sense that its operative bases are

under discussion: for example, “deliberative” formulas gain adepts in the era of internet.

Only the scientific and technical legitimation seems to resist and might explain a

scientificization or technification of politics (the “political abdication” to which we

referred before). This is not to discuss the progress of sciences, today better than

yesterday in the way they describe and explain nature; however, it seems a bit

Decision-Making Processes. Advisors, Decision Makers or Irrelevant Actors?, Cambridge 2014, Cambridge University Press, pp. 315-340, at p. 334. 772 This is one of the conclusions of a study on the profiles of the experts who took part in the Larosière Commission for the reform of the European financial system between 2009 and 2010. See K. KNIO: “The Role of Experts and Financial Supervision in the European Union: the De Larosière Commission”, in Ibíd., pp. 341-360, at p. 359. 773 C. DEVAUX: “The Role of Experts in the Elaboration of the Cape Town Convention: Between Authority and Legitimacy”, in European Law Review, Vol. 19 No. 6 (November 2013), pp. 843-863. 774 Supra, footnote 583.

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illusionary to express it in ontological terms, as if we were ‘closer to truth’ and this

being a self-sufficient and definitive authority to shape policy making: we forget that

tomorrows’ science will also be better than todays’ and it is not a linear ontologically-

finalistic but an arborescent development that also entails uncertainty775.

As is apparent, institutional soft governance may entail strong powers, with its lights

and shadows. We have seen that a lateral question in this regard is the identification of

the actual decision-makers. Networks and agencies share the same institutional

problems: legitimacy, transparency, and supervision. These can perfectly be

extrapolated to CSR policies, as it might seem that the real decision-makers avoid

spotlights, escape accountability. There are reasonable doubts on who is really making

decisions, on the share of the institutional input in the final guidelines,

recommendations, communications and –more importantly- directives. It has been

studied that “the activist role of the ECJ”776 has been fundamental to control the

decisions made by agencies and this case-law finally crystallised in the current wording

of article 263 TFEU that openly provides the review of “the legality of acts of bodies,

offices or agencies of the Union intended to produce legal effects vis-à-vis third

parties”. Article 263 TFEU repeatedly uses the expression “intended to produce legal

effects”: this constitutes a further recognition of the ECJ case law in relation to the

scrutiny of soft law, as explained elsewhere in this work, confirming that it is

impossible to return narrow positivist positions based on formal legal distinctions. We

have to adopt a more functional perspective to study the actual effects of institutions’

work, in a broad sense –the term ‘bodies’ invites to a lax interpretation as for the

European institutional building. Besides, article 290 TFEU (comma 2 a)) includes an

extra precaution, the permanent threat of the European Parliament or the Council “to

revoke the delegation” of powers to the Commission at any moment. These provisions

therefore adapt the treaties to the growing administrative complexity of the EU in the

775 As Thomas Kuhn stated: “A scientific theory is usually felt to be better than its predecessors not only in the sense that it is a better instrument for discovering and solving puzzles but also because it is somehow a better representation of what nature is really like. One often hears that successive theories grow ever closer to, or approximate more and more closely to, the truth. […] There is, I think, no theory-independent way to reconstruct phrases like ‘really there’; the notion of a match between the ontology of a theory and its ‘real’ counterpart in nature now seems to me illusive in principle. […] I do not doubt, for example, that Newton’s mechanics improves on Aristotle’s and that Einstein’s improve on Newton’s as instruments for puzzle-solving. But I can see in their succession no coherent direction of ontological development.” T. S. KUHN: The Structure of Scientific Revolutions, Chicago 1970 (Second Edition enlarged), University of Chicago Press, Vol II No. 2, p. 206. 776 E. MADALINA BUSUIOC: “Blurred areas of responsibility: Europen agencies’ scientific ‘opinions’ under scrutiny”, in M. AMBRUS, K. ARTS, E. HEY and H. RAULUS: op. cit., pp. 383-402, at p. 387.

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understanding that it is no longer a mere question of competences, but a problem of

implementation and daily exercise of powers. At the same time, the ECJ seized the

political opportunity777. The initial development of CSR confirms this role of the ECJ:

firstly, to support positive developments made by Member States that included early

social and environmental clauses in public procurement (cases against France, the

Netherlands, Finland and Austria778); and secondly, to allow the judicial review of soft

law regardless of formal nomen iuris distinctions before this was contemplated in the

TFEU779.

In any case, the ECJ will indirectly scrutinise soft governance through the eventual

revision of soft law, if intended to have legal effects. However, this method focuses on

the content, i.e., on the material product of the new modes of governance but not on the

validity of the institutional procedures behind and, therefore, constitutes a very indirect

and weak control of the institutional working methods. Diffuse and hardly identifiable

decision-makers may generate confusion in a system where “not only is the demos

absent but –like Kafka’s Castle perhaps– there is also no one in charge who can ever be

held responsible” 780.

On another front, with this general institutional problematics in mind, it is well-known

that the EU is not institutionally homogeneous: we have studied various documents

emanating from the Commission (most of them), and also from the Council and the

Parliament. Equally important has been the parallel ECJ case-law to reassure us on the

eventual judicial review of soft law and soft governance. The institutional interplay

inside the EU also determines its potential role and it is time to make some final

remarks in this respect. For instance, the Commission is the protagonist in the

development of CSR although we have to recall that this is the result of an evolving

opinion influenced, in some particular cases, by the practice of advanced EU Member

States or, last but not least, by some US initiatives.

Again, as shown, the Commission has not always been the ‘torchbearer’. Nor is the

European Parliament free of contradictions. In the overall, the EP looked like the most

progressive EU institution in terms of CSR. The cited EP’s reports on CSR and its

777 Ibíd., p. 389. 778 Please refer Chapter III, Section 3.1. 779 Please refer Chapter IV, Section 1. 780 C. SHORE: “European Governance or Governmentality? The European Commission and the Future of Democratic Government”, in European Law Review, Vol. 17 No. 3 (May 2011), pp. 287-303, at p. 301.

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proposals for amendments to the studied directives support a harder and justicialist

approach, generally contrary to soft governance and technocracy. In the heat of the

crisis, while CSR reports include pompous statements on the need to transparently

regulate corporate governance, the EP “enthusiastically welcomed the ESFS [European

System of Financial Supervision], discarding its long-standing opposition to further

consolidation of EU technocratic governance, in particular by means of supranational

agencification”781.

As for CSR, the role of the Council should not be underestimated either. We tend to

forget that the EU is, to a lower degree than years ago, but still, an international

organisation composed of “High Contracting Parties”: “ il metodo intergovernativo

tende periodicamente a riapparire nella realtà della vita istituzionale”782. An obvious

example of the remaining intergovernmental nature of the EU is the accession procedure

settled by article 49 TEU which establishes that “the conditions of eligibility agreed

upon by the European Council shall be taken into account”, a language that does not

accurately show how important the Council is (let’s recall the Copenhagen criteria). The

infringement procedure is a less obvious but perfect example of the remaining

intergovernmental and classical international procedures within the EU: under the

European Coal and Steel Convention, the High Authority “was obligated to pursue

infringements [… whereas] the Commission enjoys full discretion in this respect”783. In

comparison, the pre-litigation phase has therefore been softened and politicised. Article

258 TFEU only states that the Commission “may bring the matter before the Court”.

This evolution can also be explained in terms of governance: ‘soft’ ways of

implementation and management of compliance, even including “means to put pressure

on the Member States to comply with non-binding instruments, such as letters of

notice” in the context of the “emergence of non-binding auxiliary enforcement

procedures”, like preventive measures in the agricultural and fisheries policies784. The

EU institutional architecture is hybrid so that hybrid legal results should come as no

surprise as well as the influence of inter-governmental fora like the Council.

781 M. EVERSON: op. cit., pp. 315-340, at p. 320-321. 782 R. ADAM and A. TIZZANO: Manuale di Diritto dell’Unione Europea, Torino 2014, G. Giappichelli Ed., p. 37. 783 S. ANDERSEN: The enforcement of EU Law. The role of the European Commission, Oxford 2012, Oxford University Press, p. 131. 784 Ibíd., pp. 190 and 202.

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We detect abundant references to the Council Conclusions in the CSR initiatives

undertaken by the Commission (communications, recitals of the Directives), especially

the seminal European Councils at Lisbon (2000), Stockholm and Gothenburg (2001).

The EU intergovernmental nature is an undeniable part of its institutional DNA and it

should not be forgotten that the recourse to Council Conclusions “all’interno dell’iter

legislativo può determinare uno sviamento di procedura” 785 so that its role shall not be

neglected. The Council provided the necessary political impulse to initiate the European

CSR agenda when it invited (since it cannot oblige) the Commission to submit reports

and communications in the topic at hand. The Commission’s Green Paper of 2001 and,

more recently, its Renewed Strategy for CSR 2011-2014 are a response to this political

will. The Renewed EU Strategy for 2011-2014 recalled that “The Council and the

European Parliament have both called on the Commission to further develop its CSR

Policy” 786, expressly citing the Environment Council of 5 December 2008, the

Environment Council of 20 December 2010, the Foreign Affairs Council of 14 June

2010 and two EP resolutions of 2007 and 2011, the institutional legitimation of the

Commission to act despite being soft governance issues.

These initiatives have more institutional weight when they are backed-up by the

Council, which is also the main party in the CFSP and, accordingly, an indispensable

actor to impulse the external dimension of CSR. Beyond the stereotypes on inter-

institutional battles (that –at times– occur), there is a good amount of political

compromises and permissive cooperation, to take up and adapt the concept of

‘permissive consensus’ to which we alluded above. And even, “on several occasions,

the European Parliament has considered it useful to request, in the course of the EU

decision making process, the inclusion of explicit references to European Council

Conclusions in EU legislation to be adopted”787, with a clear intention to increase the

political weight of the initiatives at stake and indirectly recognising that many Council

Conclusions might be seen as political “mandates”788. We have referred to the EU

Strategic Framework and Action Plan on Human Rights and Democracy 2012-2014,

precisely adopted by the Council (Council Doc. 11855/12), even though it has no choice

785 R. ADAM and A. TIZZANO: Manuale…, op. cit., p. 181. 786 COM (2011) 681 Final, op. cit., p. 4. 787 F. EGGERMONT: The Changing Role of the European Council in the Institutional Framework of the European Union: Consequences for the European Integration Process, Cambridge 2012, Intersentia Ed., p. 354. 788 Ibíd., p. 360.

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but to precise, in a footnote, that “decisions on specific steps to implement this Action

Plan will be taken in accordance with the Treaties” and “does not affect the division of

competence between the EU and its Member States”. The first initiative fell on the

Commission’s Communication “Human Rights and Democracy at the heart of the EU

External Action –towards a more effective approach”, dated December 2011, which

mutated into the framework and action plan adopted by the Council in June 2012. In the

2015 spring, again the Commission and the High Representative for Foreign Affairs and

Security Policy took the initiative and issued a joint communication with the proposal of

a renewed Action Plan for the Period 2015-2019, calling on the Council to adopt it.

More rapidly that with the first action plan, only two months later, the Foreign Affairs

Council adopts it illustrating this inter-institutional permissive cooperation and, to some

extent, the bi-directionality of (soft) political mandates between the Commission and

the Council.

We shall make a final point on the Council. According to the EU’s own documentation,

apart from private actors, CSR also concerns public authorities. The success of

transparency requirements is one of its key-drivers so that the calls for more

transparency have been extended to the EU institutions. The Grand Chamber

consolidated the necessary openness and transparency of the Council vis-à-vis EU

citizens with respect to decision-making processes, defining it as an “overriding public

interest” clarifying the institutional work of the EU, based on the “democratic right of

European citizens to scrutinize the information which has formed the basis of a

legislative act, as referred to, in particular, in recitals 2 and 6 of the preamble to

Regulation No. 1049/2001”789. In a second paradigmatic case, the NGO Access Info

Europe challenged before the Court the decision of the Council to disclose the minutes

of negotiations without detailing Member States’ positions. In appeal, the First Chamber

upheld the General Court decision and dismissed the Council allegations on the

supposed sensitive nature of the documents requested that would justify an exception to

disclosure of information in virtue of art. 4(3) of Regulation 1049/2001. By rejecting

this argument, the ECJ understands that the exception needs to be assessed on a case-

by-case basis and was not sufficiently proved, therefore supporting the idea that the

effectiveness of the Council’s decision-making process was not under threat because of

789 Joined Cases C-39/05 P and C-52/05 P, Kingdom of Sweden and Maurizio Turco v. Council, Judgement of 1 July 2008, para. 67.

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transparency. The ECJ indirectly confirmed, as alleged by Access Info Europe, that “it

is precisely at the point when the procedure is initiated that maximum transparency is

vital: by the time that discussions have already been held and compromise positions

reached, transparency and public debate are no longer of any use at all”790. In sum, the

Council has not been unaffected to these new governance modes, pushed by a minority

of States led by Sweden that profited from the so-called permissive consensus, albeit

“the permissive atmosphere from which the pro-transparency coalition long derived its

power has declined”791.

The ECJ seems to have taken on the profile of a face-saving referent in this complex

institutional inter-play. It is true that the ECJ is not free from criticism either: once the

Charter was upgraded to same level of the Treaties, the Court as a “human rights

adjudicator” is limited to the application of EU Law and some argue that it lacks of a

solid and opened comparative approach to international human rights law792.

On the whole, it can be said that disappointments with regard to the Court’s role in

defending human rights are caused by the fact that public opinion and many academics

expect it to act as a constitutional court while it is an international tribunal, with its

obvious particularities. The roots of this misunderstanding are created expectations,

perhaps a desideratum, but not the Court’s clearly hybrid nature and characteristics. The

ECJ has even empowered National Courts to review the measures of State executives in

application of the Treaties: the off-cited Van Gend en Loos recognised under certain

criteria the eventual direct effect of some provisions of international agreements793. This

implicitly vested EU National Courts with complementary supervision powers with

respect to Member States and, to some extent, also the control of EU institutions

790 Case C-280/11 P, Council v. Access Info Europe, Judgement of 17 October 2013, para. 46. 791 M. ZBIGNIEW HILLEBRANDT, D. CURTIN and A. MEIJER: “Transparency in the EU Council of Ministers: An Institutionalist Analysis”, in European Law Review, Vol. 20 No. 1 (January 2014), pp. 1-20, at p. 17. Also interesting, in the preparation of Council of Ministers, the role of the COREPER, where permanent representatives face the difficulty of a “double loyalty”: towards their respective Member States and towards the EU because of their obligation to reach pre-agreements: J. LEWIS: “The Janus Face of Brussels: Socialization and Everyday Decision Making in the European Union”, in International Organisation, Monographic volume International Institutions and Socialisation in Europe, Vol. 59 No. 4 (Autumn 2005), pp. 937-971, p. 939. 792 G. De BÚRCA: “After the EU Charter of Fundamental Rights: The Court of Justice as a Human Rights Adjudicator?”, in Maastricht Journal of European and Comparative Law, Vol. 20 No. 2 (2013), pp. 168-185, p. 179 and ff. 793 In the “legal relationship between Member States and their subjects”, negative obligations provided in an international agreement produce “direct effects and creat[e] individual rights which national courts must protect”. Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, Judgement of 5 February 1963, p. 13.

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themselves: we could say that the same criteria laid down in Van Gend en Loos would

reasonably lead to the hypothesis that, in 2008, the “implicit threat of intervention”794 of

National Courts encouraged the Grand Chamber’s decision in Kadi795, overruling

nothing less than a UN Security Council Resolution (despite art. 103 of the UN Charter)

and its translation into a Council Regulation.

An institutional lesson can be drawn out for other international organisations on to what

extent the interaction between international tribunals and national courts can contribute

to control the legitimacy of the international organisation at stake when its international

tribunal might be weaker (or less willing) as to the supervision of the international

institutional itself. In any case, we have seen the ECJ’s transversal role in the area of

public procurement, in general terms dealing with soft law, with the indirect

(improvable) control of agencies, and with the Council’s transparency. This is how EU

institutions partially bypass their inherent traps in terms of “overlapping jurisdictions

resulting from layers and layers of agreements reached with a heavy emphasis on

balancing [… and] pompous and empty rhetoric”796.

The several peppered interventions of the ECJ encourage to describe it as a transversal

curative actor in the institutional building: some deficiencies would otherwise

dramatically reduce –if not annul– the institutional credibility of the EU in promoting

CSR, human rights and good governance. In the area of CSR, if at any time there are

unlawful results, there are good reasons to think that they can be avoided or annulled

thanks to the ECJ, even though their institutional origin might remain unaddressed.

Besides, the EU institutions may face legal and political responsibilities for contents and

decisions taken by multiple actors.

These institutional remarks confirm that the ECJ’s role has been positive in the overall.

Furthermore, in terms of policy transfers, “the transfer potential of the ECJ is

794 “There is reason to believe, for example, htat the pivotal Kadi judgement in 2008 was prompted by the concern that if the Grand Chamber did not review the EU policy, several N[ational] C[ourt]s would step in and do this”. E. BENVENISTI and G.W. DOWNS: “The Premises, Assumptions and Implications of Van Gend en Loos: Viewed from the Perspectives of Democracy and Legitimacy of International Institutions”, in European Journal of International Law, Vol. 25 No. 1 (2014), pp. 85-102, at p. 101. 795 Joint Cases C-402/05 P and C-415/05 P, Yassin Abdullah Kadi and Al Barakaat International Foundation v. Council of the European Union and Commission of the European Communities, Judgement of 3 September 2008. 796 A. ALESINA and R. PEROTTI : “The European Union: A Politically Incorrect View”, in The Journal of Economic Perspectives, Vol. 18 No. 4 (Autumn 2004), pp. 27-48, at p. 47.

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consistently [but erroneously] ignored”797. Precisely in the area of CSR, inter-

institutional policy transfers are particularly important and weave complex relational

networks: for example, from the US, the influence of the Dodd-Frank and Sarbanes-

Oaxley Acts plus the Alien Tort Statute. In other cases, some early concrete initiatives

that come from Member States have anticipated CSR aspects that were later

incorporated into the EU institutional agenda –sometimes traumatically, through the

ECJ judicial intervention–, resulting in potential policy transfers to other Member

States. It goes without saying the crucial transfers from other international

organisations: as for the UNGPs, the EU uses an external source and asks Member

States to implement it ‘in coordination’ via national action plans in a sort of “facilitated

unilateralism”798, a particular form of policy transfer that allows, in the meanwhile, the

influence of EU institutions. Additionally, the interaction between EU institutions

themselves: the Parliament, the Council and the Commission have all been supportive

of CSR and, setting aside their diversity, they have differently shaped the

materialisation of CSR. The EU also has transferred CSR issues to other regional

organisations, as seen in chapter III. At the end of the chain, when EU based TNCs

adopt Codes of Conduct there is a potential “private transplant of EU Law”799: a private

bottom-to-bottom policy transfer or “legal transplant” given that private of Codes of

Conduct can have an influence to extend EU law beyond the EU.

Lastly, detractors say the EU’s institutional role in promoting human rights is built on

shifting sand. We might agree on the fact that “Europe is a laboratory of a postmodern

multiplicity of human rights protection and their interaction”800. CSR confirms it. This

has to be seen against the institutional narrative on the EU, particularly insistent in its

alleged teleological and ever progressing character. The crisis since 2008 might have

broken this fairy tale promoted by EU institutions801, or perhaps its constitutive

elements have been exhausted. The EU’s global institutional role is also a question of

the self-image of authorised story-tellers, to use human rights as the cornerstone of the

797 S. BULMER and S. PADGETT: “Policy Transfer in the European Union: An Institutionalist Perspective”, in British Journal of Political Science, Vol. 35 No. 1 (January 2005), pp. 103-126, at p. 104. 798 Ibíd., pp. 110-111. 799 T. FERRANDO: “Codes of Conduct as Private Legal Transplant: The Case of European Extractive MNEs”, in European Law Journal, Vol 19 No. 6 (November 2013), pp. 799-821, at p. 809. 800 A. PAULUS: “Human Rights Protection in a European Network of Courts”, in American Society of International Law –Proceedings of the Annual Meeting, Vol. 107(April 2013), pp. 174-182, p. 174. 801 A. MORENO JUSTE: “El fin del relato europeo. La crisis del proceso de integración y su impacto sobre las narrativas europeas”, in Revista de Derecho Comunitario Europeo, Vol. 17 No. 45 (May-August 2013), pp. 607-630, at pp. 612-614.

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EU’s “civilian power”802, using Duchêne’s terminology to distinguish it from Nye’s

categories of hard and soft power.

Be that as it may, despite the official narrative that proposes a step-by-step story in

which the economic cooperation has led to wider political goals, finally adding a strong

human rights commitment, Gráinne de Búrca has instead demonstrated that human

rights were actually an essential, explicit and strong part of the European project back in

1951-1954, as shown by the drafting process of the (failed) treaty for the European

Political Community (EPC) and its surprisingly advanced provisions compared to the

current human rights system in the EU. In this sense, human rights did not emerge, but

re-emerged, during the European integration project (since the 1970’s and 1980’s, again

with the active role of the ECJ), despite the fact that “Member States continue to resist

submitting themselves to human rights monitoring by the EU, and the active assertion

of human rights protection as a goal of EU foreign policy remains in sharp contrast to

the unwillingness to declare human rights protection to be a general goal or a cross-

cutting objective of internal EU policies”803. The internal dimension of CSR might be a

“third-way” to fill the gap created by this reluctance of Member States, precisely as a

“cross-cutting objective of internal EU policies”, especially to the extent this

institutional weaknesses can affect the “global normative leadership”804 of the EU.

According to Jürgen Habermas, “in the light of a constitutionalisation of International

Law”, the EU architecture should look forward to a more symmetric repartition of

powers of initiative and legal capacity of its different institutions to overcome “the

peculiar floating position of the Commission” and the “anomaly” of the Council805.

Obviously, the insider’s view is always more aware of imperfections; notwithstanding

improvable institutional aspects, the EU is still a quite successful experiment. Outsiders

observe the actual “global regulatory power” of the EU and its international influence

when it promotes the CSR agenda. Outsiders have no qualms about saying that “the EU

802 Unfortunately, we consider that the EU’s role in the ex-Yugoslavia in the 1990’s and, more recently, in Ukraine, both affected by German interests –insufficiently studied- in relation to the relative failure to reproduce a hegemonic power within the EU, might all together put in question this theory of the EU’s “civilian power” or role. For a critical summary of Duchêne’s idea, see: V. BACHMANN and J.D. SIDAWAY: “ Zivilmacht Europa: A Critical Geopolitics of the European Union as a Global Power”, op. cit., at p. 97 ff. 803 G. DE BURCA: “The Road Not Taken: The European Union as a Global Human Rights Actor”, in The American Journal of International Law, Vol. 105 No. 4 (October 2011), pp. 649-693, at p. 681. 804 Ibíd., p. 690. 805 J. HABERMAS: “The Crisis of the European Union in the Light of a Constitutionalisation of International Law” in European Journal of International Law, Vol. 23 No. 2 (2012), pp. 335-348, at p. 345 (citations).

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is already a superpower and, importantly, a superpower of a meaningful kind”806, albeit

being aware of all these institutional determinants.

4.3.2. Substantive contributions and the post-2015 agenda

After these institutional remarks, it is necessary to finish with some general conclusions

on the substantive aspects of Europe’s role, without repeating the concrete

implementation of CSR in the EU, studied in Chapter III. When undoubtedly well-

intended authoritative voices raise their hands in horror, sophisticatedly scandalised,

because CSR and soft law appears to them too far away from their dreamed human

rights regime, we should just wonder if, given all these institutional and legal

determinants, it is reasonable to think that the EU could really act otherwise or go much

further. It is commonplace to blame EU institutions for the lack of political will of

Member States. Moreover, according to the definition of CSR proposed in the general

part of this research, it becomes clear that it should not be aimed at replacing the

available International Human Rights Law, but at complementing it with predominantly

ex-ante and horizontal strategies to coinvolve companies. In fact, the first substantive

originality of the EU is that ex-ante strategies and horizontal legal effects are not

unexplored territory, marking the European contribution to global CSR.

Indeed, ex-ante strategies are not new in the EU’s “market philosophy”, differing from

other positions within the WTO system: “la filosofia di mercato europea è basata qui

sui principi dello sviluppo sostenibile e della prevenzione dei rischi, oltre che del più

generale principio di precauzione. La vigilanza sui prodotti è, almeno in parte,

esercitata ex ante (prima cioè dell’immissione sul mercato) e non solo ex post”807.

Nor is horizontality a novel problem in the EU. It is perhaps less obvious in human

rights issues, since they are seen as binding only on States: however, that is to say it has

to “permeate all areas of law” and, therefore, there is a State duty to prevent –and

806 A. BRADFORD: “The Brussels Effect”, in Northwestern University Law Review, Vol. 107 No. 1 (2012), pp. 1-67, at p.67. 807 L. S. ROSSI: “Verso una nuova etica del Commercio Internazionale?”, in L. S. ROSSI (a cura di): Commercio Internazionale sostenibile? WTO e Unione Europea, Bologna 2003, Il Mulino Ed., pp. 11-25, at p. 23.

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remediate– third-party violations808. It is a well-established doctrine that the State’s

failure to respect human rights can be determined by act or omission809, so that the

failure to prosecute an abuse by a private actor can constitute a violation of the main

human rights treaties (at least in terms of effective judicial remedies). In particular, the

principle of non-discrimination has always been the spearhead of a progressive and

indirect horizontalization of human rights obligations, including this principle in legal

relationships inter privatos810. When the ECJ has balanced the right of free movement

of goods and the freedom of speech and assembly (in cases of demonstrations), it has

ruled the duty of the State to restrict fundamental freedoms, under certain conditions, to

guarantee the fundamental rights of other private actors, “weighing the protected

interests of the involved private parties”811. If restrictions to the freedom of speech and

assembly are possible to ensure the free movement of goods, why the ECJ might find

unlawful partial restrictions to the freedom of companies to make effective the State’s

duty to respect human rights with regard to other private actors, provided they are

proportional and justified? The way CSR is materialising in the EU seems close to this

808 Building on German Constitutional Jurisprudence, it could be described as an “effect of radiation”: E. J. LOHSE: “Fundamental Freedoms and Private Actors –Towards an ‘Indirect Horizontal Effect’”, in European Public Law, Vol. 13 No. 1 (2007), pp. 159-190, at pp. 169-170. 809 The ECHR has ruled in cases of environmental complaints that the failure to act is also punishable under the Convention. In some cases a right enshrined in the Convention that “does not merely compel the State to abstain from such interference: in addition to this primarily negative undertaking, there may be positive obligations” –Case of Guerra and Others v. Italy, Judgment of 19 February 1998 (Grand Chamber), Application No. 14967/89, para. 58. This doctrine was confirmed by linking environmental cases to article 8 on private and family life, to the extent environmental damages can be assessed under this light, since the seminal Case of López Ostra v. Spain, Judgment of 9 December 1994, Application No. 16798/90, para. 51, 52 and 58. 810 In particularly evocative terms, the ECJ has said that the prohibition of discrimination might be extended “likewise to agreements and rules which do not emanate from public authorities” (in that case the reason was nationality, all the more poignant within the EU). Case 36/74, Walrave and Koch v. Assoc. Union Cycliste Internationale et al., Judgment of 12 December 1974, para. 21. 811 The idea would be to extrapolate some of the conclusions of the ECJ in Commission v. France and Schmidberger as proposed by E. J. LOHSE (Ibíd., p. 183): “For the ‘infringer’ this not change anything: in order to fulfil its duty of protection the State has to restrict his/her freedom. However, states in the Community legal order are likewise bound not to infringe fundamental rights. It has been actively discussed if the state could take into account those rights of the private ‘infringer’, as in Commission v. France the ECJ did not mention a possible fundamental right of the farmers to demonstrate which would probably have existed, although violent demonstrations do not enjoy much protection. However, Schmidberger established respect for the other private party’s fundamental rights as an acceptable justification for a ‘failure to act’ which resulted in a ‘pyramidal’ construction. In the particular case, the action of the state could be justified by the protection of freedom of expression and assembly, fundamental rights […] When weighing the protected interests of the involved private parties, freedom of assembly prevailed because there was a legitimate goal of the demonstration and the main aim was not to hinder trade (which would be an illegal exercise of a fundamental right) but to express an opinion. Applied to Commission v. France, a test of balance between the ‘freedom of speech’ of the farmers and the free movement of goods would have pointed in the opposite direction as here the main goal was the obstruction of trade and the fundamental right was exercised in a violent way not in accordance with national laws. Obviously, this reasoning is not restricted to the above-mentioned fundamental rights but applies to all fundamental rights on the Community level”.

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balance between the protected freedoms of companies and the State’s duty to ensure

human rights, also inter privatos by virtue of the ‘permeation’ or ‘radiation’ of human

rights law to all spheres, resulting in a pyramidal construction between States and

private parties. Yet it is not a consolidated development, there are sound reasons to

consider, at least, “indirect horizontal effects” in the EU.

In general terms and compared to other organisations, the EU reacted slowly to the

emergence of CSR in the international agenda, but rapidly catched up and has even

overcome the blocking dichotomy between pure voluntarism advocates and hard-law

enthusiasts. As with the EU Charter of Fundamental Rights, in the case of CSR, the EU

is inspired by external sources to finally go well beyond those international influences

in terms of precision and detail812. CSR ‘cake’ now looks harder and more toasted on

the outside, and still soft and juicy inside: the substantive implementation of CSR shows

an evolution in which the EU has reconciled the aforementioned dichotomy creating

harder frameworks with soft contents. Before 2009, the first initiatives pointed to a very

different result and the Commission was widely criticised for being more inclined to the

so-called ‘business-case’ and merely voluntary formulas. The crisis since 2008 might

have played a role in the re-balancing of CSR policies –perhaps switching on the oven

instead of cooking a cold cake. Nobody knows what the result will be; it is an on-going

process during which an increasing consensus among Member States might change the

scenario –the temperature, in our metaphor.

It is early to know to what extent we face a change of scenery towards ever harder

initiatives. The relative hardening of CSR within the EU is consistent with two

international developments that seem to go in the same direction. Firstly, in 2000 the

OECD Council made it obligatory to establish National Contact Points for the States

adhered to the Guidelines on MNEs, even though we have seen that NCPs widely differ

as for their powers and structure. Secondly, the 2003 UN Norms on the Responsibility of

Transnational Corporations and Other Business Enterprises with regard to human

rights obligations also reflect a harder approach: “the [UN] Norms are the closest thing

to an example of a hard regulatory approach to CSR that could be envisaged in

812 “La Carta, fonte interna all’ordinamento dell’UE, è molto più precisa e dettagliata di quanto siano le fonti ‘esterne’ cui la protezione dell’Unione ha sin qui dichiarato di ispirarsi”. L. S. ROSSI: “La Carta dei Diritti Fondamentali dell’UE: una sfida costituzionale”, in L. S. ROSSI (a cura di): La protezione dei diritti fondamentali. Carta dei diritti UE e standards internazionali (XV Convegno della Società Italiana di Dirittto Internazionale –Bologna 10-11 Giugno 2010), Napoli 2011, Ed. Scientifica, pp. 19-22, at p. 19.

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traditional international law. They do not attempt to reconcile hard regulation and

voluntarism” –in this light, their difficult enforcement through litigation is also a typical

problem under traditional international law813.

The EU is halfway and reflects this wider tendency towards hardening some aspects of

CSR, while reconciling these positions. The EU’s substantive contribution is, also, this

mixed and pragmatic approach adopted so far. A proof is the sustained effort to

maintain a multi-stakeholder informative and promotion agenda even after the

discouraging failure of the first EMS Forum, all of this combined with a parallel –

unexpected– impact on EU Law (already commented upon in Chapter III) and its

transfer to the institutional-international arena.

In this respect, it must be emphasised that the substantive contribution of the EU further

has a notable international effect. If the “de-pillarization caused […] a fuzzier

demarcation between the external aspects of the AFSJ and other external

competences”814, we think it has happened the same with other policy areas after

Lisbon, to a degree that the internal dimension of CSR makes little sense without its

external one, as it can be the case with almost any other policy.

This is the result, from a substantive point of view, of an increasingly coordinated

reading of diverse treaty provisions, in particular: articles 1 to 4, 9 to 12 and 13 of the

TEU, jointly with articles 11, 21 and 205 of the TFEU. Besides, to jointly read all these

articles might lead to clearer “substantive obligations, which must be followed up on in

a different and more comprehensive way than they are today”815. The partial

implementation of the CSR agenda has shown the incipient possibilities of jointly

reading these treaty provisions: “EU Law then has the potential of taking the lead

globally and turning the trend of short-term growth mania into a reflective, long-term

sustainable development”816.

813 S. MacLEOD: “Reconciling Regulatory Approaches to Corporate Social Responsibility: The European Union, OECD and United Nations Compared”, in European Public Law, Vol. 13 No. 4 (2007), pp. 671-702, at p. 694. 814 L. S. ROSSI: “From EU Pillar to Area: The Impact of the Lisbon Treaty on the External Dimension of Freedom Security and Justice”, in C. FLAESCH-MOUGIN and L. S. ROSSI (Dirs.): La dimension extérieurse de l’Espace de Liberté, de Sécurité et de Justice de l’Union Européenne après le Traité de Lisbonne, Bruxelles 2013, Éd. Bruylant, pp. 5-21, at p. 8. 815 B. SJAFJELL: “Quo Vadis Europe? The significance of sustainable development as objective, principle ad rule of EU Law”, in C. M. BAILLET (Ed.): Non-State Actors, Soft Law and Protective Regimes. From the Margins, Cambridge 2012, Cambridge University Press, pp. 254-280, at p. 267. 816 Ibíd., p. 280.

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With its imperfections, articles 9 to 12 should be more widely used to scrutinise almost

any action of the EU, as they are a significant “European lesson” for international

organisations, as a viable and realistic supranational democracy instead of idealistically

extrapolating XIXth -Century nationalist criteria on democracy817. By the way, it should

not go unnoticed the unique European experience with regard to the penetrating

international subjectivity of individuals, utterly important in human rights: very early

the ECJ confirmed that “the [then] Community constitutes a new legal order of

international law for the benefit of which the states have limited their sovereign rights,

albeit within limited fields, and the subjects of which comprise not only Member States

but also their nationals”818. Equality and sovereignty, essential concepts in the theory of

international organisations, have suffered many changes going through the European

filter: from merely formal equality, we have walked towards a more substantive equality

by sharing sovereignty819, mainly guided by human rights concerns820.

Finally, it appears throughout this research that European initiatives have followed a

rather specific and concrete style after 2009, reflecting this “substantive” vocation of the

EU. At the same time that general principles were settled, there has been a parallel

bottom-up process in which dispersed new CSR provisions in technicalities finally

become a true cross-cutting CSR strategy –whilst other international organisations

usually work the other way round (from the general to the particular, as we have seen).

817 “The experience of the European Union, where democratic legitimation is derived from direct elections by equal citizens (via the European Parliament) and indirectly through the peoples of the Member States (via the European Council and Council), exemplifies that different bases for legitimation can not only coexist, but can be mutually supportive. The democratic legitimation of supra- and international institutions needs to be conceived as composite and ‘multilevel’”. A. Von BOGDANDY: “The European Lesson for International Democracy: the Significance of Articles 9-12 EU Treaty for International Organisations”, in European Journal of International Law, Vol. 23 No. 2 (2012), pp. 315-334, at p. 325. 818 Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, Judgement of 5 February 1963, p. 12. 819 L.S. ROSSI: Inaugural speech on the occasion of the International Congress on the Principle of Equality in EU Law, University of Bologna, 19 May 2015 –not published. 820 It is impossible to guess the final result of this process, as very early indicated E.H. Carr (1892-1982) in his seminal Twenty Years’ Crisis, first published in 1939 (with corrections in the second edition of 1945). When he wonders on the survival of nations as units of power, he answers (Spanish translation): “Marx tuvo razón al percibir que el individuo aislado no podía ser la unidad efectiva en la lucha por los derechos humanos y la igualdad humana. Pero se equivocó al suponer que la unidad última era la clase social y al infravalorar las cualidades de cohesión y unificación de la unidad nacional. […] Hoy no hay por qué cometer el error, que cometió Marx con la clase social, de tratar a la nación como la unidad-grupo definitiva de la sociedad humana”. E.H. CARR: La crisis de los veinte años (1919-1939). Una Introducción al Estudio de las Relaciones Internacionales, Madrid 2004, Ed. Catarata, pp. 306-308.

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We have to acknowledge, in this sense, that the EU has the merit of a detailed approach

able to show some very technical –but not less important– problems, as illustrated with

the crucial issue of access to justice. The EU has essentially followed the work of other

international organisations, but now has a potential leadership to define concrete

solutions for these practical problems thanks to its previous and unique experience.

Unfortunately, since the 2008 crisis began, unemployment has risen and labour is more

and more considered as a cost instead of a factor of production so that a good part of the

progress made has been reversed or simply left aside. The problems have been studied

in detail by the EU institutions, with –not less important–contributions made by

Member States. The path is opened; we shall not get left behind.

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CONCLUSIONS

I. Corporate Social Responsibility at a global level

1. Against ontological and ideological incompatibilities

‘Business and Human Rights’ studies would not exist if there was an ontological

incompatibility between globalisation and fundamental rights. Starting out from this

premise, the social legitimation of globalisation trends will depend on the definition of

Corporate Social Responsibility and on its capacity to balance States’ power, societal

expectations and global capitalism. The success of CSR will, in turn, depend on how we

build the very concept of CSR, within which we must acknowledge the necessary

centrality of human rights and the interplay between both hard- and soft-law

instruments. There is also a need for a consensual, institutional, interdisciplinary,

integrative, and human rights approach to this subject, in order to systematise the

current initiatives and infer the eventual trends for the future. This is the way to

overcome any apparently ontological incompatibility between business and human

rights, between hard and soft law, between subjects and objects of IL, between

ideologies on the market economy and any other pair of related concepts that,

otherwise, would block any reasonable study of CSR.

2. Definition and characteristics of CSR

The practice of International Organisations at a global level and of the European Union

at a regional level supports the definition of CSR that we have proposed: CSR is a

complementary strategy to increase the horizontal effects of current internationally

recognised human rights, mixing hard and soft-law instruments, in their particular

interaction with the activities of all kind of business enterprises, with a predominantly

preventive vocation. Our definition comprises all possible nuances and can be clarified

sensu contrario: CSR is not corporate philanthropy or charity; it is not only about

voluntary initiatives since it includes baseline legal requirements; it is not only

preventive though being aimed at completing IHRL with mostly ex ante strategies with

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regard to which traditional IHRL suffers from important gaps; it is not a substitute or

alternative for treaty-based obligations, but a complement; it does not place direct duties

on private actors for the moment, but develops and specifies indirect horizontal effects

upon them, through the national implementation of existing International Law. In this

line, we deduce three characteristic elements of CSR: 1) the close connection with the

type of business and the inherent impact of its concrete operations; 2) a sustainability

criteria focused on long-term effects rather than incidental responses; 3) and a clear

purpose to respect human rights, which is its legal foundation.

3. CSR and customary international law

The interrelation observed between hard law and soft law hides a deeper dialectic

between treaty law and the customary path in the development of CSR, which do not

seem irreconcilable options. However, this work does not advocate for the creation of a

new treaty or binding instrument on business and human rights, because we observe a

historical inertia against new international treaties, especially after the 11 September

2001 attacks. Suffice it to mention the General Assembly’s failure to finally adopt the

ILC projects on the responsibility of States or on diplomatic protection. The ‘treaty

curse’ adds arguments against an eventual treaty: its slow negotiation and risks of

compromise solutions of minimum contents, and its slower ratification (distinguishing

between signatures and ratifications). We shall add the possibility of hindering

reservations; the time lag before the entry into force; the need of monitoring

mechanisms for treaty implementation; and that the home countries of most TNCs did

not support the creation of the UN Working Group to negotiate a binding instrument,

which is not a good omen. Instead, the already initiated customary path shows the

opportunity to progress more rapidly (there is not a time requirement) in the

construction of a wider consensus. Of course, we do not idealise the customary way as it

can be obscure in its contents and States might be ambiguous in explaining their

practice not to risk future obligations. This is why our preference for the customary path

should not be interpreted at the expense of existing treaty law, which has proved to be

indispensable to frame and discipline the current CSR initiatives. But these initiatives

have not reached a sufficient degree of normative maturity to act otherwise –in other

words, we put forward the potential of the customary path seen as a light and drizzling

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rain over time (if adequately channelled). The multiplication of national action plans

contribute to move forward down the customary path.

4. Soft law and the development of CSR

CSR is an emerging normative system with subcategories, which vary in legal value,

specificity and scope. Many of its components are soft-law instruments, within the

framework of pre-existing human rights law. In this connection, soft law has three

advantages that mark its contribution to the development of CSR: 1) it allows the

introduction of new debates and International Law issues, such as the international

subjectivity and eventual duties of private actors, at the same time it facilitates

agreements leaving room to differences and particularities, therefore encouraging the

progressive building of a global consensus; 2) it allows the interpretation of existing

instruments in order to specify their implications and fill gaps with regard to the

complex interaction between human rights and TNCs’ activities; 3) and in the long run,

it is a useful tool to generate customary practices among States and IOs to further

regulate the human rights’ impact of TNCs. In light of this, CSR has a potential per se,

beyond its gradual ‘hardening’. In terms of regulatory processes, instead of creating ex

novo instruments that only respond to our ideals in a deductive manner deprived of

practical experience, CSR has evolved into a case-based, empiric and cumulative

regulatory process.

5. The role of International Organisations

International Organisations have a prominent role to play in this regulatory process.

First of all, IOs heavily influence the progressive development of International Law and

can promote the effective implementation of existing human rights instruments

alongside their progressive interpretation to gradually cover business practices and

responsibilities. Secondly, IOs greatly contribute to expand and accelerate States’

practice in the same direction; in fact, the priority of the UN Working Group that

followed Ruggie’s mandate is to foster national action plans on CSR. This is a far from

negligible effort because the generalisation and universalisation of national actions

plans is absolutely crucial for the normative consolidation of CSR at an international

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level, in customary terms –even regardless of their effectiveness (this can come later).

IOs also help ensure a greater degree of institutional coordination and substantive

consistency of national action plans.

6. Incipient crystallisation of CSR

For the time being, two principles are the most advanced in crystallising at the

customary level or, at least, enjoy a very promising degree of international legal

recognition. We are referring first of all to the ever-growing acknowledgement of

private correlative duties upon corporate actors in terms of human rights, as an indirect

permeation of international human rights law. Even though we still lack of sufficient

details on its contents, indirect horizontal obligations between private actors to protect

human rights have gained much credit within the international society, as proclaimed by

many soft instruments and, also, a good amount of authoritative interpretations of treaty

bodies, arbitral mechanisms and even some national Courts that all point in the same

direction. The second principle in its way to crystallise is the transversal character of

human rights within general international law. This should not be understood in

hierarchical terms but in line with the relational character of IL. Almost all IOs have

accepted to incorporate human rights’ concerns into their daily activities regardless of

their founding priorities, even economic organisations that were traditionally less active

in this regard like the World Bank or the World Trade Organisation. At the States’ level,

it starts to be commonplace to bear in mind human rights concerns when dealing with

apparently unrelated issues and negotiations, far more often and in unprecedented

manners in relation to trade and investments –though still improvable. The recognition

of some kind of private correlative duties upon TNCs, indirect emanation of IHRL, and

human rights’ institutional mainstreaming are –in the practice of both States and IOs–

the most normatively consolidated aspects of CSR: they may obviously await further

specification, but they already seem irreversible.

7. The problematic of trade and investments

As for human rights’ mainstreaming, the practice surveyed shows that the ICSID

tribunals and the WTO dispute settlement bodies have had no prejudices or reluctance

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to acknowledge the relational character of International Law and, indirectly, eventual

human rights concerns. Related human rights issues have been addressed on a number

of occasions. Their reasoning is twofold: the integration within general international law

and, secondly, the eventual place of human rights. However, States generally fail to

identify and benefit from the current opportunity niches for human rights’ protection

within trade and investment disputes. States’ failure in this area is generally due to the

inadequacy of hierarchical claims and maximalist wishes in favour of human rights over

other international obligations, so that arbitral tribunals end up with their back against

the wall, instead of reasonably arguing the relational character of International Law and

the need to counterbalance concurring international obligations, which would be the

strategy with greater chances to succeed. On several other occasions, States’ failure is

caused –in summary– by a lack of good faith and coordination in the way they regularly

cope with these concurring international obligations, unduly alleging human rights’

protection to hide internal problematics and inconsistencies. In fact, most disputes

surveyed show that the first phase of the test is passed and arbitral bodies accept the

relevance of human rights in some cases. It is at a second stage when most States fail:

when it comes to demonstrate that the measures adopted were necessary (the impact in

relation to the public good pursued), proportional (the least-inconsistent option

reasonably available was chosen), and non-discriminatory (in comparison to other

States, investors or internal legislation). It is therefore the responsibility of States to

adequately make use of the existing possibilities, both institutional and substantive: to

‘grease’ those open windows and adequately open them.

8. The UN leadership and policy transfers.

Whether positivists like it or not, soft law is not a new phenomenon within International

Law. Nor is it strange to EU Law, in its interplay with proper norms in many law-fields.

The UN, FAO, the WHO, the OECD, the ILO, the World Bank Group, and private

organisations (like the ISO) have all worked on CSR and issued guidelines,

recommendations, declarations, etc. Moreover, as time passed and the UN had released

its main contributions (the three-level framework and the UNGPs), all the above-

mentioned organisations have expressly made an effort of coordination to gradually put

their own standards in line with the UN ones, citing each other’s instruments. IOs at a

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global level already acknowledge and even promote a high level of policy transfers

between them in the area of CSR, which permeates States’ policies and some private-led

initiatives. The proliferation of national action plans are a good example.

II. Corporate Social Responsibility in the European Union

9. Particularities of CSR in the EU

The above-mentioned International Organisations have determined the first European

initiatives, but it is very important to recall the United States influence (the Alien Tort

Statute, the Sarbanes-Oxley Act and Dodd-Frank Act). In this context, it has been made

clear the European Union’s receptivity to welcome the development of IL and CSR,

perhaps a bit slowly at the beginning, but in the end including it among its working

priorities for the new millennium, reinterpreting its contents with substantive

improvements and, finally, re-upload CSR at a global level while exercising an

important influence –having hardened some of its aspects. If International Organisations

at a global level have worked from the general to the particular, the European Union has

worked the other way round, from technicalities to more general principles. This

explains why the European Union has had a ‘CSR before CSR’, unlabelled and implicit,

especially to regulate consumer’s protection and environmental issues with an initial

focus ad intra. The EU has needed some time to accept the emergence of CSR as such

and to catch up; after 2009, it can be said that the EU became a key player. In this

evolution, the EU quite rapidly understood the external dimension of CSR and the

importance to resituate this concept within international human rights law, being also a

human rights appeal ad extra. In general terms, we have deduced that CSR in the EU

has set itself up as a mainstreaming governance tool or crosscutting transversal policy

rather than a classic and separate policy per se. Finally, apart from alleviating the

tensions caused by globalisation, CSR in the EU has an additional and utterly important

role: it navigates between a market-oriented and a rights-based integration project, thus

contributing to their precarious equilibrium.

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10. Grey zones

However, it must be noted that the EU has not always been the torchbearer of CSR, as

seen at an early stage: for example, in Commission v. France (Case C-225/98) the

Commission contested a French public contract based on social requirements; or when

the then European Communities threatened to bring a WTO-complaint against some US

public-procurement restrictions affecting Myanmar’s repressive regime in 1997

(WT/D88/3). The EU is not a monolithic reality and it has been checked that, at times,

some States like France or the Netherlands, were ahead of EU institutions in the

development of some CSR-aspects, when the ECJ has become a face-saving actor. Even

later, with an apparently consolidated CSR agenda, we have found grey zones that show

the institutional complexity of the EU: in several occasions, the Council has rejected the

more daring aspects of some CSR regulatory proposals of the Commission and, at

times, even the European Parliament slows down negotiations just to artificially boost

its own importance without really making substantive corrections to proposals. For

example, the regulation of supply chains in highly sensitive trade of minerals like tin,

tantalum and tungsten, their ores, and gold; it is true that it took three years for the

Commission to draft a proposal, but the Parliament unrealistically wants to exaggerate

its contents (good enough), while it postpones delivering results and putting pressure on

the Council, which is actually the less enthusiastic EU institution in this subject.

11. Legal spill-overs

The 2008’ financial and economic crisis might have contributed to this evolution,

encouraging the hardening of some aspects. Indeed, there are important CSR “legal

spill-overs”. CSR has grown well beyond the initial borders of mere voluntariness, as it

becomes evident in the following hard norms: Directive 2013/34/EU has established

compulsory reporting for the extractive industry on payments to any government over €

100,000 within a financial year, in money or in kind; Directive 2014/95/EU has made

mandatory non-financial reporting for companies over 500 employees specifying

concrete and explicit human rights concerns, including corporate governance reports

and details on companies’ governing bodies; Directives 2014/24/EU and 214/25/EU

have incorporated and consolidated obligatory CSR requirements into public

procurement regulation in all sectors; and Regulation 1286/2014 has further increased

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the protection of small shareholders and retail investors against aggressive practices in

the financial sector. The recentness of these initiatives makes it impossible to analyse

the level of national implementation, which is probably an interesting study to be made

in the near future in continuation of this research.

12. Access to justice

This research has analysed access to justice for human rights’ victims of TNCs with a

view to liberating this debate from ideological overtones, even though we take a stance

to conform to Dante’s famous warning: “the hottest place in hell will be reserved for

those who, in times of great moral crisis, have chosen to stay neutral”. First of all, we

advocate for civil proceedings instead of criminal law procedures, not only because of

its pecuniary aspect (essential in the conflict between human rights’ protection and

business interests), but also to avoid a highly risky overreliance and overdependence on

public prosecutors’ role. In our view, the problem of access to justice should be

reframed in terms of extraterritorial adjudicative jurisdiction and extra-contractual

civil responsibilities. The EU rules on jurisdiction lack of an admissibility criterion on

‘related actions’ of companies, built upon the contents of the litigious, to make EU-

based TNCs accountable for their activities in third countries (through subsidiaries or

otherwise), as a sufficient jurisdictional link regardless of other factors (nationality of

victims, etc.). Despite the absence of such admissibility criterion, the EU may take over

precisely when the US Alien Tort Statute is at a low ebb.

In practice, obviating idealistic stances that we have rejected due to the absence of

political will to undertake revolutionary normative innovations, our functional approach

has demonstrated for instance that complex corporate structures and veils can be pierced

on the basis of experience gained so far in the area of competition law and taxation law,

both at an international and a European level. The leading British and Dutch case-law

has shown that, against the doctrine of forum non conveniens, a certain forum

necessitatis can emerge in the EU to avoid intolerable denials of justice or eventually

irreconcilable judgements, according to art. 47 of the European Charter of Human

Rights and art. 6 of the European Convention for Human Rights. In this line, it seems

more or less feasible to further explore art. 7 of Reg. 864/2007: it certainly refers to

environmental damages (always in advance in comparison to other human rights), but it

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could be extended to human rights violations in more general terms. Indeed, art. 7 of

Rome II Regulation establishes a link with the ‘place giving rise to the damage’, which

might open a window to vindicate the jurisdiction of a European court since concrete

damages can occur outside the EU, but the decisions leading to them might have been

made in European headquarters, if this can be proved. Besides, in the seminal Owusu v.

Jackson (Case C-281-02), the ECJ has ruled that art. 2 of Reg. No. 44/2001 also

regulates relationships with the Courts of non-Contracting States and that it can be read

jointly with art. 6(1): EU national courts have some room for manoeuvre in determining

under what circumstances ‘reasons of efficiency and justice’ would justify exercising its

jurisdiction, thus validating joint hearings of cases affecting subsidiaries and parent

companies and bypassing this way other jurisdictional obstacles. The European

Parliament has proposed changes to improve these limited possibilities, while the

Commission encourages the adoption 1980 Hague Convention. Importantly enough, the

main European contribution in this subject has consisted of discreetly preserving the

margin of appreciation of States when it comes to interpret and make use of the limited

flexibility under the Brussels Convention (Reg. 44/2001) and Rome II (Regulation

864/2007). It is up to European States to go down this road, timidly advanced by some

EU national courts.

13. National policies in the EU

EU member-States have worked reactively rather than proactively, many times making

the mistake of designing crisis-motivated and internally-oriented CSR policies, instead

of assuming its global dimension in terms of human rights and development, as

promoted by IOs at a global level and by the EU at a regional level. For the moment 24

European countries have adhered to the OECD Guidelines on MNEs, accordingly

establishing their respective National Contact Points, of discussable benefits. Many EU

member-States have approved National Action Plans on CSR, but only five States

specifically address ‘business and human rights’, which is perhaps caused by some

hesitancy to intensify the human rights language within CSR, despite the international

agreement in tying CSR to human rights. In any case, the presence of NAPs is only a

small part of the CSR-performance of States and we should also look at other

regulations, starting with the prompt transposition of recent Directives in the area of

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282

corporate governance, public procurement, environment and consumer’s protection. We

concluded that the Commission should not promote two different national action plans

(on CSR and a separate one on ‘business and human rights’), given that it generates an

undesirable conceptual confusion: the best policy option is a single and precise action

plan, if possible approved by the Parliament or at the level of the Council of Ministers,

in which States should recognise the centrality of human rights within CSR, also

coherently with the action plans promoted by the UN.

Besides, instead of creating new institutions for the NCPs and other CSR-organs, we

rather defend that national human rights institutions should have an utterly important

role in developing and monitoring CSR. National human rights institutions, being

official but to a certain point functionally independent from governments, are a good

option to host non-judicial grievance and mediation mechanisms on business and human

rights –without excluding proper access to justice. Finally, NHRIs could also foster

social awareness and generate public CSR-certificates for products and companies,

ideally in coordination with new CSR-certificates at the EU level, making sure that they

remain as independent as possible from both governmental and corporate influences. It

is unlikely to be a top-down process: CSR-certificates created in Brussels will be hardly

acceptable for France, Germany or the United Kingdom, in relation to their respective

multinational corporations. It is more likely to be a bottom-up process in which each

State (ideally through its national human rights institution) generates a CSR certificate

that somehow penetrates into EU law after some time. In any case, the most important

point is to avoid the proliferation of for-sale private CSR-certificates.

14. Some easily improvable aspects

CSR is developing at a good speed in the EU, but there are some improvable or, at

times, forgotten aspects that it is worth recalling now because most of them might be

easily corrected. The institutional promotion of CSR moves between punitive and

persuasive initiatives, between hard and soft law, being all necessary. At times, a more

punitive approach can be interesting: the Commission could put in place a blacklist of

poor performing companies. A complementary and more persuasive way is to work on a

public European CSR-certificate with a human rights-based approach, before the

appearance of for-sale and private certification schemes. The Commission is wrong to

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283

assert that two national action plans are necessary; a single NAP on CSR and human

rights is enough, if adequately designed. At the same time, close attention should be

paid to how States finally implement the incipient legal spill-overs of CSR –States may

communicate policies and pieces of legislation that in reality do not correspond to the

EU’s requirements, even though it is early to make an assessment on that. Finally, it

must be noted that new bureaucratising bodies are probably a diversionary manoeuvre

that hides concrete goals and deadlines; we already have in the EU national human

rights institutions that can be tasked with CSR.

On the international front, the EU sometimes lament over the fact that WTO dispute

bodies rule against European standards on phytosanitary products, public procurement

and a variety of safety requirements that third States contest as unlawful restrictions on

trade. A comprehensive EU strategy on international standards is urgent. Especially in

relation to the SPS Agreement, TBT Agreement and GATT itself, the WTO

increasingly refers to guidelines and standards created by other international

organisations; if the EU does not find safe certain hormones, for example, the EU must

realise that it can indirectly influence trade rules on safety by putting more pressure on

those other standard-setting organisations (mainly, the WHO, FAO and ISO) to align

themselves with the EU’s views on certain products, provided that the EU is not acting

in a protectionist manner or defending spurious interests, and bearing in mind that the

EU is not “the navel of the earth”.

The effectiveness of the European contribution to global CSR also depends on how the

EU standardises human rights clauses in trade and investment agreements; the EU

should adopt a general modus operandi rather than a case by case proceeding to

negotiate these treaties –of course, leaving some room for certain cautions and

particularities. There is a lot of pending work to put in order investment agreements,

since the Treaty of Lisbon granted the EU exclusive trade competencies and over

foreign direct investments (but not all investments). In sum, despite improvable aspects

and the long way to go, it starts to be reckless and highly risky for companies to ignore

or neglect this emerging normative scenario.

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O’HAGAN, E.: “Too soft to handle? A Reflection on Soft Law in Europe and Accession

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QUIRICO, O.: “The Merger of Corporate Social Responsibility into the EU Common

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SWEENEY, J.A.: Margins of Appreciation: “Cultural Relativity and the European Court of Human Rights in the Post-Cold War Era”, The International and Comparative Law Quarterly, Vol LIV No. 2 (2005), pp. 459-474

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VIVAS-TESÓN, I.: “La implementación de los Principios Rectores ONU sobre empresas y derechos humanos en España”, in Anais dos III Congresso Iberoamericano de Direito Sanitário / II Congresso Brasileiro de Direitto Sanitário, Vol. 2 No. 2 (July-December 2013), pp. 870-880.

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ZBIGNIEW HILLEBRANDT, M., CURTIN, D. and MEIJER, A.: “Transparency in the EU Council of Ministers: An Institutionalist Analysis”, in European Law Review, Vol. 20 No. 1 (January 2014), pp. 1-20.

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Press Articles

DONNAN, S.: “Trade talks lead to ‘death of Doha and birth of new WTO”, in Financial Times, 20 December 2015, accessed online at: http://www.ft.com/cms/s/0/97e8525e-a740-11e5-9700-2b669a5aeb83.html#axzz3vdqE8qHB.

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TAYLOR, A.: Ikea may have stumbled into one of North Africa’s most intractable land disputes”, in Washington Post, 29 September 2015, available at https://www.washingtonpost.com/news/worldviews/wp/2015/09/29/ikea-may-have-stumbled-into-one-of-north-africas-most-intractable-land-disputes/.

WTO Reporter: “United States Drops WTO Case Against Brazil Over HIV/AIDS Patent Law”, 26 Junes 2001.

No author: “Suecia renuncia a reconocer al Sáhara tras el bloqueo marroquí a Ikea”, El País, 18 January 2016, available at: http://internacional.elpais.com/internacional/2016/01/18/actualidad/1453119823_900989.html.

Publications issued by NGOs and other transnational actors

BUGGENHOUDT and COLMANT: Report AVOCATS SANS FRONTIÈRES: Justice in a Globalised Economy: A Challenge for Lawyers. Corporate Responsibility and Accountability in European Courts, Brussels 2011, Avocats Sans Frontières.

FÉDERATION INTERNATIONALE DES LIGUES DE DROITS DE L’HOMME: L’affaire Amesys, Paris 2014 (online publication ISSN 2225-1790).

HUMAN RIGHTS WATCH: Corporate Accountability: a Human Rights Watch Position Paper. Recommendations to the Special Representative to the U.N. Secretary General on Business and Human Rights, 8 September 2005.

RICHARD HOLME, Lord R. and WATTS, P.: “Corporate Social Responsibility: Making Good Business Sense, in World Business Council for Sustainable Development No. 10, available at www.wbcsd.ch

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TRANSPARENCY INTERNATIONAL: Corporate Responsibility and Anti-Corruption: the Missing Link?, Working Paper No. 1 (2010).

UN GLOBAL COMPACT: Impact. Transforming Business, Changing the World (Report 2015), 205 pp.

Holy See

Statement of H.E. Archbishop Silvano M. Tomasi, Permanent Observer of the Holy See to the United Nations and Specialized Agencies in Geneva, on the occasion of the 26th Session of the HRC. Available at www.vatican.va

Encyclical Letter, Sollicitudo Rei Socialis (30 December 1987).

Encyclical Letter, Laudato si –On Care of our Common Home (14 May 2015).

INTERNATIONAL JURISPRUDENCE

(In order of appearance)

International Court of Justice (and Former Permanent Court of International Justice)

LaGrand (Germany v. United States of America), Judgment of 27 June 2001, I.C.J. Reports 2001, p. 466.

Barcelona Traction, Light and Power Company, Limited, Judgement of 5 February 1970, I.C.J. Reports 1970, p. 3

Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo), Preliminary Objections, Judgment of 24 May 2007, I.C.J. Reports 2007, p. 582.

“Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) notwithstanding Security Council Resolution 276 (1970)”, Advisory Opinion, 21 June 1971, ICJ Reports 1971, p. 16.

FORMER PERMANENT COURT OF INTERNATIONAL JUSTICE: Case of the S.S. “Lotus” , Judgment No. 9 of 7 September 1927.

“Accordance with International Law of the Unilateral Declaration of Independence in Respect

of Kosovo”, Advisory Opinion, 22 July 2010, ICJ Reports 2010, p. 403.

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International Criminal Court for the Former Yugoslavia

Prosecutor v. Dusco Tadic a/k/a “Dule”, Decision on the Defence Motion for Interlocutory

Appeal on Jurisdiction, of 2 October 1995.

UN Committee on Civil and Political Rights

Manuel Wackenheim vs. France, Decision of 15 July 2002, Communication No. 854/1999, UN

Doc. CCPR/C/75/D/854/1999 (2002).

ICSID Arbitral Tribunals

AUCOVEN vs. Bolivarian Republic of Venezuela, Award of 23 September 2003, Case No. ARB/00/5.

Wena Hotels Ltd. vs. Arab Republic of Egypt, Annulment Proceeding, Decision of 5 February 2002, Case No. ARB/98/4.

Amco vs. Indonesia, Resubmitted Case, Award of 5 June 1990, Case No. ARB/81/1.

AAPL vs. Republic of Sri Lanka, Final Award of 27 June 1990, Case No. ARB/87/3.

SPP vs. Arab Republic of Egypt, Award on the merits, Case No. ARB/84/3.

CDSE vs. The Republic of Costa Rica, Final Award of 17 February 2000, Case No. ARB/96/1.

METALCLAD CORPORATION vs The United Mexican States, Award of 30 August 2000, Case No. ARB(AF)/97/1.

Borders Timbers Limited et al. vs. The Republic of Zimbabwe, Procedural Order No. 2 of 26 June 2012, Case No. ARB/10/25.

Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA vs. The Argentine Republic, Decision on liability of 30 July 2010, Case No. ARB/03/19.

SAUR International S.A. vs. Argentine Republic, Decision on Jurisdiction and Liability of 6 June 2012, Case No. ARB/04/4.

Técnicas Medioambientales Tecmed SA vs. Mexico, Award of 29 May 2003, Case No. ARB(AF)/00/2.

UNCITRAL

S.D. MYERS Inc. vs. Government of Canada, Partial Award of 13 November 2000.

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WTO Panels and Appellate Body

United States – Standards for Reformulated and Conventional Gasoline, Report of the Appellate Body, 29 April 1996, WTO Doc. WT/DS2/AB/R.

Japan – Taxes on Alcoholic Beverages, Report of the Appellate Body, 4 October 1996, WTO Doc. WT/DS11/AB/R.

United States – Import Prohibition of certain Shrimps and Shrimp Products, Report of the Appellate Body, 12 October 1998, WTO Doc. WT/DS58/AB/R.

GATT (Panel): Thailand – Restrictions on Importation of And Internal Taxes on Cigarettes, Report of the Panel, 7 November 1990, Doc. DS10/R – 37S/200.

GATT (Panel): Conciliation. United States – Prohibition of imports of tuna and tuna products from Canada, Report of the Panel, 22 February 1982, Doc. L/5198 – 29S/91.

AB: Korea – Measures affecting imports of fresh, chilled and frozen beef, Report of the Appellate Body, 11 December 2000, WTO Doc. WT/DS169/AB/R.

European Communities – Measures affecting asbestos and asbestos-containing products, Report of the Panel, 18 September 2000, WTO Doc. WT/DS135/R.

EC – Measures concerning meat and meat products (Hormones), Report of the Appellate Body, 16 January 1998, WTO Doc. WT/DS48/AB/R.

United States – Measures affecting the cross-border supply of gambling and betting services, Report of the Appellate Body, 7 April 2005, WTO Doc. WT/DS285/AB/R.

Canada – Patent Protection of Pharmaceutical Products, Report of the Panel, 17 March 2000, WTO Doc. WT/DS114/R

European Communities –Conditions for the Granting of Tariff Preferences to Developing Countries. Report of the Appellate Body, 7 April 2004, Doc. WT/DS246/AB/R.

European Court of Human Rights

Lautsi and Other vs. Italy, Judgement of 18 March 2011 (Grand Chamber), Application No.

30814/06.

Sud Fondi Srl and Others v. Italy, Judgement of 20 January 2009, Application No. 75909/01.

Sacilor-Lormines v. France, Judgement of 9 November 2006, Application No. 65411/01.

Agrokompleks v. Ukraine, Judgement on merits of 6 October 2011, Application No. 23465/03.

Capital Bank AD v. Bulgaria, Judgement of 24 November 2005, Application No. 49429/99.

Regent Company v. Ukraine, Judgement of 3 April 2008, Application No.773/03.

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Västberga Taxi Aktiebolag and Vulic v. Sweden, Judgement of 23 July 2002, Application

No.36985/97.

Centro Europa Srl and Di Stefano v. Italy, Judgement of 7 June 2012 (Grand Chamber),

Application No. 38433/09.

Aon Conseil et Courtage S.A. and Christian de Clarens S.A. v. France, Judgement of 25 January

2007, Application No. 70160/01.

S.A. Dangeville v. France, Judgement of 16 April 2002, Application No. 36677/97.

Buffalo Srl in liquidation v. Italy, Judgement of 03 April 2003, Application No. 38746/03.

Eko-Elda Avee v. Greece, Judgement of 09 March 2006, Application No. 10162/02.

Stran Greek Refineries and Stratis Andreadis v. Greece, Judgement of 9 December 1994,

Application No. 13427/87.

Verlagsgruppe News GmbH v. Austria (No. 1 and 2), Judgement of 14 December 2006,

Application No. 10520/02.

Axel Springer AG v. Germany, Judgement of 7 February 2012 (Grand Chamber), Application

No. 39954/08.

Financial Times Ltd. And Others v. the United Kingdom, Judgement of 15 December 2009,

Application No. 821/03.

Sanoma Uitgevers B.V. v. The Netherlands, Judgement of 14 September 2010 (Grand

Chamber), Application No. 38224/03.

MGN Limited v. the United Kingdom, Judgement of 18 January 2011, Application No.

39401/04.

Glas Nadezhda EOOD and Anatoliy Elenkov v. Bulgaria, Judgement of 11 October 2007,

Application No. 14134/02.

André and Another v. France, Judgement of 24 July 2008, Application No. 18/603/03.

Case of OAO Neftyanaya Kompaniya Yukos v. Russia, Judgement on Just Satisfaction of 31 July

2014, Application No. 14902/04.

Case of OAO Neftyanaya Kompaniya Yukos v. Russia, Judgement on merits of 20 September

2011, Application No. 14902/04.

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Guerra and Others v. Italy, Judgment of 19 February 1998 (Grand Chamber), Application No.

14967/89.

López Ostra v. Spain, Judgment of 9 December 1994, Application No. 16798/90.

Court of Justice of the European Union (or former European Communities) Case C-225/98, Commission v. France, Judgement of 26 September 2000.

Case 31/87, Gebroeders Beentjes BV, Judgement of 20 September 1988.

Case 513/99, Concordia Bus Finland, Judgement of 17 September 2002.

Case C-448/01, EVN AG, Wienstrom GmbH, Judgement of 4 December 2003.

Case C-322/88, Grimaldi v. Fonds des maladies professionnelles, Judgement of 13 December 1989.

Case C-410/09 Polska Telefonia Cifrowa, Judgement of 12 May 2011.

Joined Cases C- 189-02 P, C-202/02 P, C-205/02 P to C-208/02 P and C-213/02 P, Dansk Rorindustri et al. v. Commission, Judgement of 28 June 2005 (Grand Chamber).

Case T-496/11, United Kingdom of Great Britain and Northern Ireland v. European Central Bank, Judgement of 4 March 2015.

Case 68/86, United Kingdom of Great Britain and Northern Ireland v. the Council, Judgement of 23 February 1988.

Case C-185/07, Allianz SpA and GeneraliAssicurazioni Generali SpA v. West Tankers Inc., Judgment of 10 February 2009 (Grand Chamber).

Case C-536/13, Gazprom OAO v. Lietuvos Respublika, Judgment of 13 May 2015 (Grand Chamber).

Case C-281/02, Owusu v. Jackson, Judgment of 1 March 2005 (Grand Chamber).

Case C-98/06, Freeport plc v. Olle Arnoldsson, Judgment of 11 October 2007.

Case C-645/11, Land Berlin v. Ellen Mirjam Sapir et al., Judgment of 11 April 2013.

Case C-45/13, Andreas Klainz v. Pantherwerke AG, Judgment of 16 January 2014.

Steel and Morris v. The United Kingdom, Case 68416/01, 15 February 2005.

Joined Cases 281, 283 to 285 and 287/85, Germany, France, Netherlands, Denmark and United Kingdom v. Commission, Judgement of 9 July 1987.

Joined Cases C-39/05 P and C-52/05 P, Kingdom of Sweden and Maurizio Turco v. Council, Judgement of 1 July 2008.

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Case C-280/11 P, Council v. Access Info Europe, Judgement of 17 October 2013.

Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, Judgement of 5 February 1963.

Joint Cases C-402/05 P and C-415/05 P, Yassin Abdullah Kadi and Al Barakaat International Foundation v. Council of the European Union and Commission of the European Communities, Judgement of 3 September 2008.

Case 36/74, Walrave and Koch v. Assoc. Union Cycliste Internationale et al., Judgment of 12

December 1974.

NATIONAL JURISPRUDENCE

(In order of appearance)

United Kingdom

No judgement – Out-of-court Settlement: Sithole v. Thor Chemicals Holding Ltd, [2000] A2/2000/2894 (AC).

No judgement – Out-of-court settlement: Ngcobo v Thor Chemicals Holdings Ltd & Desmond Cowley, 1997.

ENGLISH HIGH COURT: Yao Essaie Motto and Ors v Trafigura Ltd., [2009] EWHC 1246 (QB).

HIGH COURT OF JUSTICE (Queen’s Bench Division, Senior Courts Costs Office): Yao Essaie MOTTO & ORS v. Trafigura Ltd and Trafigura Beheer BV, Judgment of 15 February 2011, EWHC 90201.

HIGH COURT OF JUSTICE (Queen’s Bench Division): The Bodo Community and Others v. The Shell Petroleum Development Company of Nigeria Limited, Judgment of 20 June 2014, EWHC 1973 (TCC).

HOUSE OF LORDS: Spiliada Maritime Corporation v. Cansulex Ltd., Judgment of 19 November 1986.

HOUSE OF LORDS: Lubbe and Others and Cape Plc. And Related Appeals [2000] UKHL 41, Judgment of 20 July 2000 (opinions of the Lords of Appeal for Judgment).

HOUSE OF LORDS: Connelly (A.P.) v. RTZ Corporation Plc and Others, Judgment of 24 July 1997.

HIGH COURT OF JUSTICE (Queen’s Bench Division): Vava and Others v. Anglo American South Africa Limited –Appeal, Judgment of 24 July 2013, EWHC 2131(QB).

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HIGH COURT OF JUSTICE (Court of Appeal, Queen’s Bench Division): David Brian Chandler v Cape Plc (Appelant), Judgment of 25 April 2012, EWCA Civ 525.

HIGH COURT OF JUSTICE (Queen’s Bench Division): Guerrero and Others v. Monterrico Metals Plc and Rio Blanco Copper SA, Judgment of 16 October 2009, EWHC 2475 (QB).

The Netherlands

RECHTBANK AMSTERDAM (Amsterdam Court): Trafigura Beheer B.V., Case No. 13/846003-06, Judgment of 23/07/2010.

GERECHTSHOF AMSTERDAM (Amsterdam Court of Appeal): Trafigura Beheer B.V –Appeal, Case No. 23/003334-10, Judgment of 23 December 2011.

RECHTBANK DEN HAAG (Court of The Hague): Plaintiffs 1 and 2 (Oruma) and Vereniging Milieudefendie v. Royal Dutch Shell and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 December 2009, Case No. 330891/HA ZA 09-579.

RECHTBANK DEN HAAG (District Court of the Hague): Friday Alfred AKPAN (Ikot Ada Udo) and Vereniging Milieudefensie v. Royal Dutch Shell Plc and Shell Petroleum Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/337050/HA ZA 09-1580.

RECHTBANK DEN HAAG (District Court of The Hague): Fidelis Ayoro OGURU and Alali EFANGA (Oruma) v. Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/330891/HA ZA 09-0579.

France

COUR DE CASSATION (Chambre sociale): Case No. 1184, 10 May 2006 : https://www.courdecassation.fr/jurisprudence_2/chambre_sociale_576/arr_ecirc_8861.html

United States of America

SUPREME COURT: Miles v. Illinois Central R. Co., 315 US 698 (1942), Judgment of 30

March 1942. Available at: https://supreme.justia.com/cases/federal/us/315/698/case.html

COURT OF APPEALS (2nd Circuit): Dolly M.E. FILARTICA and Joel Filartiga v. Americo

Norberto PEÑA-IRALA, No. 191, Docket 79-6090, Judgement of 30 June 1980. Full text

accessed at http://openjurist.org/630/f2d/876.

SUPREME COURT: Sosa v. ALVAREZ MACHAIN et al., No. 03-339, Judgement of 29 June

2004.

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COURT OF APPEALS (2nd Circuit): Wiwa and Others v. Royal Dutch Petroleum, Docket Nos. 99-7223 and 9-7245, Judgement of 14 September 2000 (on admissibility). [Out-of-Court Settlement]. Accessed at http://caselaw.findlaw.com/us-2nd-circuit/1401109.html.

COURT OF APPEALS (2nd Circuit): Kiobel and Others v. Royal Dutch Petroleum, Docket No. 06-4800-cv, 06-4876-cv, Judgement of 17 September 2010.

SUPREME COURT: Kiobel and Others v. Royal Dutch Petroleum, Docket No. 10-1491, Judgement of 17 April 2013.

COURT OF APPEALS (9th Circuit): Doe v. UNOCAL, Docket Nos. 00-56603, 00-57197, 00-

56628, 00-57195, 13 April 2005 [Out-of-court settlement].

STATES’ PRACTICE (1)

LEGISLATION

United States

CONGRESS OF THE USA (111th): Dodd-Frank Wall Street Reform and Consumer Protection Act, 5 January 2010, Sections 1504 and 1505, H.R. 4173.

Denmark

Act No. 1403 (27 December 2008) amending the Act on Financial Statements (Lov om aendring af arsregnskabsloven).

Act No. 546 adopted by the Danish Parliament 18 Junes 2012 (establishing the Danish National Contact Point in accordance with the OECD Guidelines on MNEs)

France

Law No. 2010-788 of 12 July 2010 (“portant engagement national pour l’environnement”), Journal Officiel de la République Française, No. 0160 du 13 Juillet 2010, page 12905.

Conseil d’Etat Décret nº 2012-557 du 24 avril 212 relatif aux obligations de transparence des entreprises en matière sociale et environnementale, Journal Officiel de la République Française No. 0099 du 26 avril 2012, page 7439

Finland

Government Decree on the Committee on Corporate Social Responsibility, Helsinki, 4 December 2008.

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STATES’ PRACTICE (2)

POLICIES

United Kingdom

GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: Good Business. Implementing the UN Guiding Principles on Business and Human Rights, Presented to the Parliament by the Secretary of State for Foreign and Commonwealth Affairs by Command of Her Majesty, September 2013, Cm 8695.

The Netherlands

MINISTRY OF FOREIGN AFFAIRS: National Action Plan on Business and Human Rights, April 2014.

Denmark

DANISH GOVERNMENT: Danish National Action Plan. Implementing the UN Guiding Principles on Business and Human Rights, March 2014.

Finland

MINISTRY OF EMPLOYMENT AND THE ECONOMY –Labour and Trade Department: National Action Plan for the implementation of the UN Guiding Principles on Business and Human Rights, October 2014, Publication 46/2014.

Italy

Published Draft: “The foundations of the Italian Action Plan on the United Nations Guiding Principles on Business and Human Rights”, 2015.

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PRACTICE OF INTERNATIONAL ORGANISATIONS

World Trade Organisation

GATT (1947): Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, 28 November 1979, GATT Document L/4903.

Hong Kong Ministerial Conference: Ministerial Declaration, Doha Work Programme, Adopted on 18 December 2005, Hong Kong, WTO Doc. WT/MIN(05)/DEC.

Council for TRIPS: Paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health, 24 June 2002, WTO Doc. IP/C/W/355.

General Council: Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, Decision of 2 September 2003, WTO Doc. WT/L/540.

World Bank Group

The latest revision of the Inspection Panel’s Operating Procedures date April 2014 and are available at: www.inspectionpanel.org

IFC/MIGA: CAO Operational Guidelines, Washington 2007, available at www.cao-ombudsman.org

IFC/MIGA: CAO Operational Guidelines, Washington 2013.

IFC: Policy on Environmental and Social Sustainability, Washington January 2012.

Organisation for Economic Development and Cooperation

Guidelines for Multinational Enterprises, Paris 2011, OECD Publishing.

Policy Framework for Investment User’s Toolkit, Paris 2011, OECD Publishing.

Model Convention with respect to taxes on income and on capital. Available at www.oecd.org

International Labour Organisation (UN Agency)

INTERNATIONAL INSTITUTE FOR LABOUR STUDIES / ILO: “Governance, International Law and Corporate Social Responsibility”, Research Series No. 116 (2008).

Tripartite Declaration on MNEs and Social Policy (1977)

Declaration on Fundamental Principles and Rights at Work (1998)

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ILO: Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, revised version adopted by the Governing Body of the International Labour Office at its 295th Session, March 2006. (A non-revised 4th edition was issues 29 August 2014).

Food and Agricultural Organisation (UN Agency)

Voluntary Guidelines to support the progressive realization of the right to adequate food, 127th Session of FAO Council, November 2004

Voluntary Guidelines on the responsible governance of tenure of land, fisheries and forests, Committee on World Food Security, 38th Special Session, 11 May 2012

Principles for Responsible Investment in Agriculture and Food Systems, Committee on World Food Security, 41st Session, 15 October 2014

Code of Conduct for Responsible Fisheries

International Code of Conduct on the Distribution and Use of Pesticides

UN Conference on Trade and Development

World Investment Report. Transnational Corporations, Extractive Industries and Development, (2007)

G-7 (informal international institution)

G7: Leaders’ Declaration “Think Ahead. Act Together”, Summit at Schloss Elmau (Germany),

7-8 June 2015.

Inter-agency initiatives

OECD – ISO: Memorandum of Understanding between the OECD and ISO in the Area of Social Responsibility, 5 May 2008.

FAO – IFAD – UNCTAD – WB: Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources (Extended version), 25 January 2010.

UNIDROIT – FAO – IFAD: Legal Guide on Contract Farming, Rome 2015.

OECD – FAO: DRAFT Guidance for Responsible Agricultural Supply Chains

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OECD, WTO and WORLD BANK GROUP: Global Value Chains: Challenges, Opportunities and Implications for Policy, Report prepared for submission to the G-20 Trade Ministers Meeting, Sydney-Australia (19th July 2014).

Practice of the United Nations

(In order of appearance)

Security Council

Resolution (on Irak), 28 March 2003, UN Doc. S/RES/1472 (2003).

Resolution (on Sierra Leone), 4 December 2002, UN Doc. S/RES/1446 (2002).

Resolution “on the illicit trade in rough diamonds”, 28 January 2003, UN Doc. S/RES/1459

(2003).

General Assembly

Resolution “Transforming our World: the 2030 Agenda for Sustainable Development”, 25

September 2015, UN Doc. A/RES/70/1.

United Nations Millennium Declaration, Resolution adopted on 8th September 2000 (8th plenary

meeting), New-York, 18th September 2000, UN Doc. A/RES/55/2, and the Follow-up to the

outcome of the Millennium Summit, UN Doc. A/RES/55/162

Role of the United Nations in promoting development in the context of globalisation and

interdependence, Resolution of 20 December 2001, New-York 22 February 2001, UN Doc.

A/RES/55/212.

Alternative approaches and ways and mean within the United Nations system for improving the

effective enjoyment of human rights and fundamental freedoms, Resolution 32/130, 16

December 1977.

Towards global partnerships: a principle-based approach to enhanced cooperation between the

United Nations and all Relevant Stakeholders, Resolution of 7 February 2014, UN Doc.

A/RES/68/234.

Resolution adopted on the Human Rights Council, 15 March 2006, UN Doc. A/RES/60/251.

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Treaty Bodies

ESCR Committee: Statement on Globalisation and Economic, Social and Cultural Rights, May

1998, UN-Doc. E/1999/22-E/C.12/1998/26.

ESCR Committee: General Comment No. 9, UN-Doc. E/C.12/1998/ (on the Domestic

Application of the Covenant)

ESCR Committee: General Comment No. 14, UN-Doc. E/C.12/2000/4 (on the right to health).

ESCR Committee: General Comment No. 13, UN-Doc. E/C.12/1999/10 (on the right to

education).

ESCR Committee: General Comment No. 3, UN-Doc. E/1991/23 (on the nature of States’

obligations).

ESCR Committee: Statement “An evaluation of the obligation to take steps to ‘the maximum of

available resources’ under an Optional Protocol to the Covenant”, UN. Doc E/CN.12/2007/1, 10

May 2007.

ESCR Committee: General Comment No. 4 (on the right to adequate housing), UN-Doc.

E/1992/23.

ESCR Committee: General Comment No. 12 (on the right to adequate food), UN-Doc.

E/C.12/1999/5.

ESCR Committe: General Comment No. 15 (on the right to water and sanitation), UN-Doc.

E/C.12/2001/11

Special Procedures of the Human Rights Council (and former Commission)

“Realization of Economic, Social and Cultural Rights”, Report of Danilo Türk, Special

Rapporteur, UN Doc. E/CN.4/Sub.2/1991/17.

Resolution on Human rights and transnational corporations and other business enterprises, 20

April 2005, UN Doc. E/CN.4/RES/2005/69.

Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises

with Regard to Human Rights, UN Doc. E/CN.4/Sub.2/2003/12/Rev.2.

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Draft Resolution on Responsibilities of Transnational corporations and other business

enterprises with regard to human rights, 7 August 2003, UN Doc. E/CN.4/Sub.2/2003/L.8.

Resolution 2004/116 on the Responsibilities of transnational corporations and related business

enterprises with regard to human rights, 20 April 2004, UN Doc E/CN.4/2004/L.11/Add.7 p. 81

ff.

Interim Report of the SRSG on the issue of human rights and transnational corporations and

other business enterprises, 22 February 2006, UN Doc. E.CN.4/2006/97.

Report of the SRSG on the issue of human rights and transnational corporations and other

business enterprises, Addendum on Corporate responsibility under international law and issues

in extraterritorial regulation: summary of legal workshops, 15 February 2007, UN Doc.

A/HRC/4/35/Add.2.

Protect, Respect and Remedy: a Framework for Business and Human Rights, Report of the

SRSG on the issue of human rights and transnational corporations and other business

enterprises John Ruggie, UN Doc. A/HRC/8/5, 7 April 2008.

Guiding Principles on extreme poverty and human rights, by the Special Rapporteur on Extreme Poverty Ms. Magdalena Sepúlveda, UN-Doc A/HRC/21/39

Clarfying the Concepts of Sphere of Influence and Complicity, Report of the SRSG on the issue

of human rights and transnational corporations and other business enterprises John Ruggie, 15

May 2008, UN Doc. A/HRC/8/16.

Resolution on the mandate of the SRSG on the issue of human rights and transnational

corporations and other business enterprises, 18 June 2008, UN Doc A/HRC/8/7.

Report of the SRSG on the issue of human rights and transnational corporations and other

business enterprises John Ruggie, “Guiding Principles on Business and Human Rights:

Implementing the United Nations ‘Protect, Respect and Remedy’ Framework”, 21 March 2011,

UN Doc. A/HRC/17/31.

Resolution on Human Rights and transnational corporations and other business enterprises, 6

July 2011, UN Doc. A/HRC/RES/17/4.

Resolution on human rights and transnational corporations and other business enterprises, 15

July 2014, UN Doc. A/HRC/RES/26/22.

Report of the Working Group on the issue of human rights and transnational corporations and

other business enterprises, 5 August 2014, UN Doc. A/69/263.

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Resolution on the elaboration of an international legally binding instrument on transnational

corporations and other business enterprises with respect to human rights, 14 July 2014, UN

Doc. A/HRC/RES/26/9.

Report of the Independent Expert on the promotion of a democratic and equitable international

order, 5 August 2015, UN Doc. A/70/285.

Report of the Independent Expert on the promotion of a democratic and equitable international

order Alfred-Maurice de Zayas, 14 July 2015, UN Doc. A/HRC/30/44.

International Law Commission

Fragmentation of International Law: Difficulties Arising From the Diversification and

Expansion of International Law, Report of the Study Group of the International Law

Commission, 13 April 2006, UN Doc. A/CN.4/L.682.

Report of the International Law Commission, Fifty-eighth session, New York 2006, UN Doc.

A/61/10, pp. 516-519, Annex E on Extraterritorial Jurisdiction.

Conferences and Declarations

Vienna Declaration and Program of Action, Part I, parr. 5, adopted by the (second) World Conference on human rights, Vienna, June 25th 1993, UN-Doc. A/CONF.157/24.

Tehran Declaration, Final Document of the World Conference on human rights, Tehran, May 13th 1968, UN-Doc. A/CONF.32/41.

Studies

The Millennium Development Goals Report 2015, New York 2015.

Office of the High Commissioner for Human Rights (UN Secretariat)

OHCHR: Frequently Asked Questions on Economic, Social and Cultural Rights, Fact Sheet No. 33, Geneva 2008, United Nations.

OHCHR: Frequently-asked questions on a human rights-based approach to development

cooperation, New York and Geneva 2006.

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OHCHR: Economic, Social and Cultural Rights, handbook for National Human Rights Institutions, United Nations, New York and Geneva 2005.

OHCHR: Les droits de l’homme et les accords commerciaux internationaux. Utilisation des clauses d’exception générale pour la protection des droits de l’homme, New-York-Geneva 2005, Nations Unies.

Others

SECRETARY GENERAL: Appointment of Mr. John Gerald Ruggie, UN Doc. SG/A/943.

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PRACTICE OF THE EUROPEAN UNION

(In order of appearance)

Commission: communications

COM (2001) 366 Final, 18 July 2001, Green Paper promoting a European framework for Corporate Social Responsibility.

COM (2002) 347 Final, 2 July 2002, Corporate Social Responsibility: a business contribution to sustainable development.

COM (2011) 671 Final, 25 October 2011: A Renewed EU Strategy 2011-14 for Corporate Social Responsibility.

COM (2000) 379 final –not published in the Official Journal, was approved by the European Council meeting at Nice (December 2000).

COM (2006) 136 final, Implementing the Partnership for Growth and Jobs: making Europe a Pole of Excellence on Corporate Social Responsibility, , 22 March 2006

COM (2010) 2020, 3 March 2010, Europe 2020. A strategy for smart, sustainable and inclusive growth,

Staff Working Document SWD (2015) 144 Final, 14 July 2015, Implementing the UN Guiding Principles on Business and Human Rights –State of Play.

COM (2013) 138 Final, 14 March 2013, on the application of the Unfair Commercial Practices Directive. Achieving a high level of consumer protection. Building Trust in the Internal Market.

COM (2012) 22 Final, 27 January 2012, Trade, Growth and Development. Tailoring trade and investment policy for those countries most in need.

COM (2014) 263, 13 May 2014, A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries.

EUROPEAN COMMISSION and HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS AND SECURITY POLICY: Joint Communication to the European Parliament and to the Council. Action Plan on Human Rights and Democracy (2015-2019). “Keeping Human Rights at the heart of the EU Agenda”. Brussels, 28 April 2015, JOIN (2015) 16 Final.

COM (2001) 428, 25 July 2001, European Governance. A white paper.

COM (2002) 278 FINAL, 5 June 2002, Action Plan: Simplifying and improving the regulatory environment.

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Commission: legislative proposals

COM (2011) 684 Final, of 25 October 2011, Proposal for a Directive of the European Parliament and the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings.

COM (2013) 207 Final, 16 March 2013, Proposal for a Directive of the European Parliament of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups.

COM(2012) 352 Final, 3rd July 2012, Proposal for a Regulation of the European Parliament and of the Council on key information documents for investment products.

COM(2014) 111 Final, 5 March 2014, Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-regulation of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high risk areas.

Staff Working Document: SWD(2014) 52 Final, Executive Summary of the Impact Assessment Accompanying the document “Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas.

JOIN(2014) 8 Final, 5 March 2014, Joint Communication to the European Parliament and the Council. Responsible sourcing of minerals originating in conflict-affected and high-risk areas. Towards an integrated EU approach.

Commission: studies and policy papers

Flash Eurobarometer 363. How Companies Influence our Society: Citizen’s View, Report, Brussels (April 2013), 134 pp.

Flash Eurobarometer 393. Discrimination in the EU in 2012, Report. Brussels (November 2012), 238 pp

An Analysis of Policy References made by large EU Companies to Internationally Recognised CSR Guidelines and Principles, Brussels (March 2013), 19 pp.

My Business and Human Rights. A guide to human rights for small and medium-sized enterprises, Brussels (March 2013), 28 pp.

A partial and fragile recovery. Annual report on European SME’s 2013/2014, Brussels (July 2014).

Corporate Social Responsibility. National Public Policies in the European Union, Compendium 2014, Brussels June 2014

Tips and Tricks for Advisors. Corporate Social Responsibility for Small and Medium-Sized Enterprises, Brussels 2013.

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Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013).

Employment and Recruitment Agencies. Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013)

ICT Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013),

Council

Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000.

Presidency Conclusions, Nice European Council, 7-10 December 2010, Annex 1 (Social Agenda).

Presidency Conclusions, Stockholm European Council, 23-24 March 2001.

Presidency Conclusions, Gothenburg European Council, 15-16 June 2001.

Council conclusions. EU’s approach to trade, growth and development in the next decade, 3154th Foreign Affairs Meeting, Brussels, 16 March 2012.

Council Conclusions. Increasing the impact of EU Development Policy: an Agenda for Change, Brussels, 14 May 2012, Council Doc. 9369/12.

EU Strategic Framework and Action Plan on Human Rights and Democracy, Luxembourg, 25 June 2012, Council Doc. 11855/12.

European Parliament

Jacques Delors, President of the Commission: Speech to the European Parliament on the occasion of the investiture debate of the new Commission, Strasbourg 10 February 1993, Official Journal of the European Communities, Supplement 1/93.

Resolution on EU standards for European enterprises operating in developing Countries: towards a European Code of Conduct, [A4-508/98], Official Journal of the Europen Communities, C 104, Part II, 14 April 1999, pp. 180-184.

Resolution on the Commission Green Paper on Promoting a European framework for Corporate Social Responsibility (COM(2001) 366 –c5-0161/2002-2002/2069(COS))

Report on the Communication from the Commission concerning Corporate Social Responsibility: A business contribution to Sustainable Development (COM(2002) 347 -2002/2261 INI), Final A5-0133/2003, 28 April 2003.

Report on corporate social responsibility: a new partnership (2006/2133 INI), Final A6-0471/2006, 22 December 2006.

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Report on corporate social responsibility in international trade agreements (2009/2201(INI)), EP reference A7-0317/2010, 11 November 2010.

Corporate Social Responsibility. Identifying what initiatives and instruments at EU level could enhance legal certainty in the field of corporate social responsibility, PE462.464, 2012.

Amendments adopted on the proposal for a regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importer of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas, 20 May 2015, P8_TA-PROV(2015)0204.

Resolution on institutional and legal implications of the use of ‘soft law’ instruments, 2007/2028(INI) P6_TA (2007) 0366, OJEU C 187 E/, 24 July 2008, pp. 75-79.

EU Law

Council Directive 84/450/EEC, of 10 September 1984, relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising, Official Journal of the European Communities L 250 Vol. 27 of 19 September 1984.

Directive 2003/51/EC, 18 June 2003, amending Directives 78/660/EEC, 83/349/EEC, 86/635/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies, banks, and other financial institutions and insurance undertakings, Official Journal of the European Union L 178 of 17 July 2003, p. 0016-0022.

Directive 2013/36/EU of the European Parliament and the Council, 26 June 2013, on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, Official Journal of the European Union L-176, pp. 338-436, 27 June 2013.

Directive 2013/34/EU of the European Parliament and the Council, 26 June 2013, on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, Official Journal of the European Union, 29 June 2013, L 182 pp. 19 ff.

Directive 2014/95/EU of the European Parliament and of the Council, 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, Official Journal of the European Union, 15 November 2014, L 330 pp. 1 ff.

Regulation (EU) No. 1286/2014 of the European Parliament and of the Council, 26 November 2014, on key information documents for packaged retail and insurance-based investment products (PRIIPs), Official Journal of the European Union, L 352, pp. 1 ff.

Directive 2014/24/EU of the European Parliament and of the Council, 26 February 2014, on public procurement and repealing Directive 2004/18/EC, Official Journal of the European Union, 28 March 2014, L 94, pp. 65 ff.

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Directive 2014/25/EU of the European Parliament and of the Council, 26 February 2014, on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, Official Journal of the European Union, 28 March 2014, L 94, p. 243 ff.

COMMISSION Regulation (EC) No. 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and the Council, Official Journal of the European Union L 320/1 of 29 November 2008.

Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, Official Journal of the European Union L 007, 13 January 2004 p. 0041-0044.

Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal of the European Union L 012 , 16/01/2001 P. 0001 – 0023).

REGULATION (EC) No 864/2007 of the European Parliament and the Council, of 11 July 2007, on the law applicable to non-contractual obligations (Rome II), Official Journal of the European Union L-199/40 of 31/07/2007.

International Agreements

EUROPEAN COMMUNITY: “Agreement Establishing and Association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part. Final Act. Joint Declaration concerning Guidelines to Investors”, Official Journal of the European Communities, L. 352, 30 December 2002.

EU-ACP Group of States: Agreement amending for the second time the Partnership Agreement between the members of the African Caribbean and Pacific Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000, as first amended in Luxembourg on 25 June 2005, Official Journal of the European Union L 287, 4 November 2010.

Other documents

EU-CELAC: Santiago Declaration, Santiago de Chile, 27 January 2013, [Council of the EU Doc. 5747/13].

EU-CELAC: Brussels Declaration, Brussels, 11 June 2015, (Council of the EU Doc. 9839/15).

European Parliament, Council and Commission: Interinstitutional Agreement on better law-making, OJ 2003, C 321/01.

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LIST OF INTERNATIONAL TREATIES

International Bank for Reconstruction and Development Articles of Agreement (1945)

Convention for the Protection of Human Rights and Fundamental Freedoms (1950)

Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1966)

International Covenant on Civil and Political Rights (1966)

International Covenant on Economic, Social and Cultural Rights (1966)

Vienna Convention on the Law of Treaties (1969)

UNESCO Convention for the Protection of the World Cultural and Natural Heritage (1972)

Brussels Convention on Civil Liability for Oil Pollution Damage (1992)

OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997)

Kyoto Protocol to the UN Framework Convention on Climate Change (1997)

Protocol to the Basel Convention on Liability and Compensation for Damage Resulting from Transboundary Movements of Waste and Their Disposal (1999)

United Nations Convention Against Corruption (2003).

ILO Core Conventions:

Forced Labour Convention (No. 29 -1930)

Freedom of Association and Protection of the Rights to Organise Convention (No. 87 -1948)

Right to Organise and Collective Bargaining Convention (No. 98 -1949)

Equal Remuneration Convention (No. 100 -1951)

Abolition of Forced Labour Convention (No. 105 -1957)

Discrimination (Employment and Occupation) Convention (No. 111 -1958)

Minimum Age Convention (No. 138 -1973)

Worst Forms of Child Labour Convention (No. 182 -1999)

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WEBSITES USED

Official Websites (IOs and States’ practice)

European Union Law

http://eur-lex.europa.eu

European Commission’s site on CSR

http://ec.europa.eu/growth/industry/corporate-social-responsibility

Danish CSR Council

http://csrcouncil.dk/

Council of Europe

www.coe.int

European Court of Human Rights (Council of Europe)

www.echr.coe.int

United Nations Treaty Series

http://treaties.un.org

Office of the UN High Commissioner for Human Rights

http://www.ohchr.org

Basel Convention

www.basel.int

World Trade Organisation

www.wto.org

World Bank

www.worldbank.org

World Bank Inspection Panel

www.inspectionpanel.org

Compliance Advisor Ombudsman of the IFC (WB)

www.cao-ombudsman.org

OECD Guidelines on MNEs and NCPs

https://mneguidelines.oecd.org/ncps/

International Labour Organisation

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www.ilo.org

Food and Agricultural Organisation

www.fao.org

Holy See

http://www.vatican.va

Private initiatives and sites

International Organisation for Standardisation

www.iso.org

Global Reporting Initiative

www.globalreporting.org

UN Global Compact

www.unglobalcompact.org

www.globalcompactfoundation.org

Equator Principles

www.equator-principles.com

UN Principles on Responsible Investments

www.unpri.org

CSR Europe

www.csreurope.org

Other resources

Forbes List of Global 2000 Companies

http://www.forbes.com/global2000/list

Fortune “500 List”

http://fortune.com/fortune500

Business and Human Rights Resource Center

http://business-humanrights.org

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INDEX OF TABLES AND DIAGRAMS

Diagram No. 1

“The place of CSR in relation to the tensions of Globalisation”, p. 21.

Diagram No. 2

“Pyramid of Correlative Private Duties under IHRL”, p. 63.

Diagram No. 3

“Legal composition of CSR”, p. 74.

Table No. 1

“Characterising CSR: charity or human rights”, p. 68.

Table No. 2

“National Policies in the EU: Screening the Best Initiatives”, p. 201.

Table No. 3

“Taxonomy of Soft Law and CSR in the EU”, p. 213.

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